DPS Patna

 Marketrefers to the whole region where

buyers and sellers of a commodity are in
contact with each other to effect the
purchase and sale of the commodity.

DPS Patna
 The essential constituents of a market are:
 Area: Market is not related to any particular
place. It spreads over an area.
 Buyers and sellers: should be in contact with
each other.
 Commodity: For the existence of market, there
must be a commodity which will be sold and
purchased among buyers and sellers.
 Competition: an essential condition, otherwise
different pries may be charged for the same
commodity.

DPS Patna
DPS Patna
 Features of Perfect Competition are:
 A large number of buyers and sellers
 Homogenous product
 Freedom of exit and entry
 Absence of selling costs
 Absence of transportation costs

DPS Patna
DPS Patna
Q. Explain the implications of large
number of buyers in a perfectly
competitive market.
Ans:

DPS Patna
Q. Explain the implications of freedom of
entry and exit in a perfectly competitive
market.
Ans:

DPS Patna
DPS Patna
DPS Patna
 Why can a firm not earn abnormal profits
in the long run? Explain.[3m]
 Explain the conditions of perfect
competition. Why is the demand curve
facing a firm under perfect competition
perfectly elastic?[3]
 Why is a firm under perfect competition
a price taker?[2m]
 What is a price taker firm?[1m]

DPS Patna