7.

No government intervention:
In this market there is no government intervention i.e., there
are no taxes, subsidies, control on supply of raw materials etc.
This condition is essential to allow free entry of firms/ sellers and
for the automatic adjustment of the market forces of demand and
supply.

8. No selling costs:
Selling homogeneous product at a given price rules out the
possibility of advertisement or other sales promotion expenses. As
such there are no selling costs incurred in a perfectly competitive
market.

English economists advocate the concept of perfectly

competitive markets whereas the American economists prefer to
conceive 'pure competition model' which has three features viz.
large number of buyers and sellers, homogeneous product and
free entry and exit. They believe that such type of markets can be
found in farm products. According to English economists, the
perfectly competitive markets are in some ways far removed from
our real life experiences. Hence, it is said to be a myth or an
ideal. To be specific, competition becomes imperfect when any of
the conditions of perfect competition are not fulfilled. However, the
fact remains that the study of the perfectly competitive market
does provide a conceptual framework to help us analyse the more
complex market-situations encountered in real life.

3.2 SIGNIFICANCE OF TIME ELEMENT IN PRICE

DETERMINATION – Dr. ALFRED MARSHALL

Dr. Alfred Marshall introduced the element of time in price

determination in a perfectly competitive market.
Marshall has described four time periods.
1) Market period (very short period)
2) Short period
3) Long period
4) Very long Period (secular period)

1) The Market Period:

The market period is that in which supply of a commodity
remains fixed. It means supply of a commodity is limited by the
existing stock. As a result supply becomes perfectly inelastic.
Hence demand for a commodity influences price of that
commodity. Supply remaining constant changes in demand lead to
change in the price of that commodity. This price is called market