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PERFECT COMPETITION MARKET PPT.pptx

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PERFECT COMPETITION MARKET PPT.pptx

  1. 1. Dr K.Sunanda Associate Professor MBA PERFECT COMPETITION MARKET
  2. 2. What is perfect competition?  Perfect competition is the simplest model of a market structure in which all firms in a market are price takers and in which there is no restriction on the entry and exist from the market. The market with perfect competition atmosphere is known as perfect competition
  3. 3. DEFINITION  . Perfect competition is a unique form of the marketplace that allows multiple companies to sell the same product or service. Many consumers are looking to purchase those products. None of these firms can set a price for the product or service they are selling without losing business to other
  4. 4. EXAMPLE
  5. 5. Features of perfect competition  Large number of similar buyers and sellers Under perfect competition, there are a large number of buyers and sellers. The number of buyers and sellers are so large that the share of each seller in the total supply and the share of each buyer in the total demand is very small and none of them can affect the total supply and total demand by changing their supply and demand respectively.
  6. 6.  No Entry and Exit Barriers - Under perfect competition, there exists no barriers for the entry of a new firm and exit of a firm.  Have Perfect Knowledge All the buyers and sellers under a perfect competition situation have perfect knowledge about the market conditions. Both buyers and sellers are fully aware of the product, its availability, price etc  No Publicity and Propaganda are required As all the buyers and sellers of a perfectly competitive market have perfect knowledge about the product and its attributes, publicity and propaganda regarding the sale of the products is nota required.
  7. 7.  No Transport Cost Perfect competition is based on the assumption that there exists no transportation cost. Due to this the goods/commodities are available at same prices in all places in a perfectly competitive market  Absence of Government Intervention In a perfectly competitive market, government does not interfere the working of the market. There exists neither licensing nor legal issues during the entry of new firms into the industry. Government does not interfere in matters like regulating market prices, controlling the supply of inputs, fixation of quota on production etc.  Firm is a Price Taker not Price Maker In a perfectly competitive market, firm is a price taker not price maker. It accepts the price prevailing in the market. Market price is determined based on the demand and supply of the products.

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