market types of market national income stock and flow concept concepts pf national income

1. ENGINEERING ECONOMICS &
MANAGEMENT
MARKET & NATIONAL
INCOME

2. Group Members:
 Abhijit Panchmatiya(130280105030)
 Paras Boricha(130280105004)
 Gautam Parmar(130280105034)
 Darshan Chaniyara(130280105006)
 Anil Sindhav(130280105053)
 Anil Nakum(130280105027)
 Jignesh Ravliya(13028015049)
 Divyang Viramgama(130280105062)
FACULTY : Prof. J.D.Mistry

3. MARKET

4.  MEANING :
- A market is one of the many varieties
of systems, institutions, procedures, social
relations and infrastructures whereby parties engage in exchange.
- While parties may exchange goods and services
by barter, most markets rely on sellers offering their goods or
services (including labor) in exchange for money from buyers. It
can be said that a market is the process by which the prices of
goods and services are established.
- Markets facilitate trade and enables the distribution
and allocation of resources in a society. Markets allow any trade-
able item to be evaluated and priced

5. MARKET
 According to prof. R.P.Chapman, “The term market refers not
necessarily to a place but always to a commodity and the buyers
and sellers who are in direct competition with one another.”
 According to A.A.Cournot, “Economists understand by the term
market, not any particular place in which things are brought and
sold but the whole of any region in which buyers and sellers are
in such free intercourse with one another that the price of the
same good tend to equality, easily and quickly.”
 According to Benham, “Any area over which buyers and sellers
are in such close touch with one another, either directly or
through dealers, that the prices obtainable in one part of the
market affect the prices paid on other part.”

6. TYPES
OF
MARKETS

7. PERFECT
COMPETITION

8.  Its not a type of market but is a model of market proposed by
Alfred Marshall in his Principles of Economics .
 In economic theory, perfect competition (sometimes called pure
competition) describes markets such that no participants are
large enough to have the market power to set the price of
a homogeneous product.
 Because the conditions for perfect competition are strict, there
are few if any perfectly competitive markets.
 A primary purpose of perfect competition is to illustrate
perfection, resource allocation & to provide a benchmark for
comparison with real world market structures.

9. CHARACTERISTICS
 Generally, a perfectly competitive market exists when every
participant is a "price taker", and no participant influences the
price of the product it buys or sells. Specific characteristics may
include:
1.A large number buyers and sellers
2. No barriers of entry and exit
3. Perfect factor mobility
4. Perfect information
5. Zero transaction costs
6. Profit maximization
7.Homogeneous products
8.No externalities
9. No selling costs

10.  In the short run, perfectly competitive markets are
not productively efficient as output will not occur where
marginal cost is equal to average cost (MC = AC). They
are allocatively efficient, as output will always occur where
marginal cost is equal to marginal revenue (MC = MR).
 In the long run, perfectly competitive markets are both
allocatively and productively efficient.
Allocative efficiency is a state of the economy in which production represents consumer preferences/ and Productive
efficiency occurs when the economy is using all of its resources efficiently.

11. EXAMPLES
 Though there is no actual perfectly competitive market in
the real world, a number of approximations exist:
-Horse betting is also quite a close approximation
-Another example is that of a large auction of identical
goods with all potential buyers and sellers present/
-EBAY

13. Monopoly is a market situation where there is
only a single seller with complete control
over an industry.
Features of monopoly
• Single seller
• Price discrimination
• No close substitutes
• Unique product
• Entry is restricted
• Price maker

14. • True monopolies generally exist in
government controlled markets.
• eg. Indian railway
• Monopoly in private business is rare.
• Private firms who have considerable market
share.
• Ex,. Microsoft, intel, google,

15. BARRIERS OF MONOPOLY
POWER
ECONOMIC BARRIERS.
a) Capital requirements
b) Technological superiority
c) No substitute goods
d) Control of natural resources
LEGAL BARRIERS
a) legal rights provides opportunity to monopolise market.
b) Ex,. Patents and copyrights.

16. Application of monopoly
 Example TATA NANO
 Monopoly in its segment.
 Tata , the only seller.
 No close substitutes for nano in the market.
 Barriers to entry in the market(capital requirement,
technology,)

18.  Meaning
 features of Monopolystic Competition

19.  Monopolystic competition refers to a market situation
where there are various firms selling a variety of
products.
 In simple words , “ there is competition which is keen ,
though not perfect ,among many firms making very
similar products ”.

20. According to R.F.Kahn :
“ Competition is imperfect if the demand
for the individual firm’s product is not perfectly elastic ”.
According to Samuelson :
“Imperfect competition prevalls in an
industry or group of industries wherever the individual
sellers are imperfect competitiors , facing their own non-
horizontal and curves and thereby having some measure
of control over price ”.

21.  In the market , there are number of sellers , who
produce a close substitute products and services .
 Every product in the market has some minor quality
differntiation .
 There not any control for entry or exit for competitor .
It means number of companies may increases or
decreases at any time .
 All company has independent behaviour.
 There is differentiation in the quality of all products;
all product can be differentiating from each other.

22.  Various types of products are sell-out in different
geographical area by different companies to different
customers.
 Normally competition among firm arises due to
quality and apperence of the product .
 Due to specific quality and special apperence for the
product or service , the company has some control over
the prices for specific customers or for specific
geographic location .

24. * Meaning
*Characteristics of Oligopoly Market

25. *Oligopoly is situation where a few giant comapanies are
competing against each other.
*There is independence in the decision – making of various
points like price of the product , major ingredients of the
product and other promotional strategies .
*For Example , Any policy change in telecommunication or
networking company like Vodafone , may direct effect to
other companies like airtel or idea who are operating in
the same industry.

26. *There are very few large companies ; hence ,they are
mainly interdependence .
*Since , due to lesser competitors, they try to capture the
market but their advertising and promotional scheme .
*Due to interdependence of the firm , group behaviour can
be observed .
*Since , there are very few competitors in the market ; they
can create a significant effect on customer’s mind.

27. * Due to lesser competitors , to create impart on
customer’s mind the constantly apply various marketing
strategy .
*All companies always apply various marketing strategy
for their profit maximization they very well aware about
the nature of market.
*On basis of nature of product , oligopoly market may be
defined into two parts as identical product oligopoly and
differential product oligopoly .

30. National income :
National income is the result of all economist activities of the nation in terms of
money. It is the most important macroeconomics variable which determines
the business level and environment of country.
National Income may be defined as aggregate factor, income i.e., earning of
labour and poverty , which arise the current production of goods and services
by the Nation Income.

31. National Income = National Product = National
Expenditure
(1) Sum of values of all finished products and services
produced.
(2) Sum of all incomes in cash and kind, accuring due to
production in the year
(3) Sum of consumers expendiure,net investment
expenditure and government expenditure of all goods
and services

32. Terminology related to National
Income :
(1) GNP- Gross National Product
(2) GDP- Gross Domestic Product
(3) NNP- Net National Product
(4) NDP- National Domestic Product
(5) Personal Income
(6) Disposable Income

33. Stock and Flow
If every month person is deposit Rs 1000 into emergency fund
account or for future saving scheme then at the end of year
total saving or deposited amount is twelve thousand .
Here, monthly deposited is flow and yearly total balance is
stock which accumulate flow. At the end pf year balanced
should reflect between difference of inflow and outflow.
When inflow exceed outflow, balance is positive and when
outflow exceed inflow, balance is negative.

34. Difficulties in Calculating
National Income
Non availability of reliable Statistics
Literacy and ignorance
Black money
The services of housewives is not included in
national income
Social Services
Environmental Cost

36. N.I. AT CURRENT PRICE
 It is also known as nominal year price.
 It is refers to measure the value of an
economy’s activities on the basis of the
price which is ongoing time.
 Current price concern with the counting
of the value of goods and services at a
price which is the price when the goods
and services are produced.

37. N.I. at constant price
 It is also known as base year price.
 It is measuring of national income on the
basis of a base year price.
 The base year is previous year.
 Base year is fixed by economist
 Base year is year there is not any kind
of economical or political or social
problem.

38.  National income is the money value of
an economy’s activities.
 National income can be measure at
current year prices or constant year
prices

39.  N.I. at constant price is batter then
current price.
 Because the constant priced national
income can be used to compare
between years.
 It can be used to analyse the changes in
price level in an economy.

40. Market & National Income
(1) What is National Income ?
(2) Stock & Flow Concept of National Income.
(3) National Income @ Current Price & Constant Price.
Now, we will learn about
CONCEPT OF NATIONAL INCOME

41. It has seven concept.
1) G.D.P.
2) N.D.P.
3) G.N.P.
4) N.N.P.
5) Per Capita Income
6) P.I.
7) D.I.
First four major concept of economy which whole economy
studies concept depends on

42. G.D.P.
It is short form of “GROSS DOMESTIC PRODUCT”.
GROSS means “Value of all Goods and services produced within
the country”.
Domestic means
Not producing or selling out of the country
OR
Don’t add income from abroad.
Example : Suppose factory produced goods with the help of so
many things like labour, machinery, land and building etc…
But that doesn't mean when the production of goods is finalised
by factory charges on each and everything used to produced good.
Simplly intermidiate goods like labour, machinery whatever we use to
produced goods, we exclude the intermediate (labour, machinery
etc..).

43. How to Calculate G.D.P. ?
We have two types of G.D.P. .
Nominal GDP & Real GDP
Item Qty, Price
Bread 100 Rs. 1
Chees 20 Rs. 5
Year: 2013
Item Qty, Price
Bread 150 Rs. 2
Chees 25 Rs. 7
Year : 2014
Example :

44. Nominal GDP @2013 = 100(1) + 20(5)
= 200
Nominal GDP @2014 = 150(2) + 25(7)
= 475
Nominal Growth in GDP = [(475-200)/200] × 100
= 137.5%
GDP = P1*Q1 + P2*Q2 + ………………
Real GDP @2013 = 100(1) + 20(5)
= 200
Real GDP @2014 = 150(1) + 25(5)
= 275
Real Growth in GDP = [(275-200)/200]× 100
= 37.5%

45. N.D.P.
GDP = Gross Domestic Product
NDP = Net Domestic Product
In GDP & NDP only difference is one word Gross and Net.
Gross means “not adding intermediate goods”.
So,
NDP = GDP + Intermediate Goods(labour, machinery, land etc..)

46. G.N.P.
GDP = Gross Domestic Product
GNP = Gross National Product
In GDP & GNP only difference is one word Domestic and National.
Domestic means
Not producing or selling out of the country
OR
Don’t add income from abroad.
So,
GNP = GDP + Income Arising From Abroad (NFIA)

47. N.N.P.
NNP = Net National Product
This Word
Belong To
NDP
Adding
Intermediate
Goods
This Word
Belong To
GNP
Adding
Abroad
Income
So,
NNP = NDP + GNP

48. PER CAPITA INCOME
It is also known as “Income Per Person”.
It means income of the people in Country.
It is calculate by Taking measure of all sources of income in aggregate and
divinding it by the total population.
Per Capita Income = National Income of Particular Year
Population In Particular Year

49. PERSONAL INCOME
Prsonal Income is the sum of all income, actually received by all
households during a given year.
Personsl Income = All Income – (Social Security + Medicare + Incometax)
All three things deduction by IRS ( Internal Revenue Service )
Example :
Tax Owed > Tax Paid by Company Please pay Tax
Tax Owed < Tax Paid by Company Get Money Back

50. DISPOSABLE INCOME
Out of Personal Income, share paid to government in the form of personal
taxes
Disposable Income = Personal Income – Personal Taxes
THE END