PAGE NO.

DATE:

Perfect Competitton
a beorecal m0al
Aperlecty compehhiue maruet struchure is
pd in economics to Uncleskan how narue B und er Cev tain

condihons.
In this type ot marhet, mere are many buyers and sellerg
uwho are all small ancl have no con rol over the marhet pricp
e prìce faue TS, eaning they have Ae to acept fhe
They
prevaling maruet prr'ce or heir goocs

Key assumphons a perfecity compehiue narhet s fructe

Large humber ot bugeYs and 8e|lers

Ono tndividual buyer or seler hau he power to inHuence
the marmet price
2) tomDgeneaLS produ
s) Perfect infoma hon 29 1S ueeless,

no intos mahon a8y mme hrid

4) Free enhy ancd cait
there. are no arhhcial reshic hons on en
8uch au high tavtup coss leal bYYievs

The combined eect of fhege asumphons or an individl

Brm owney is that heshe hau no powev to con bro) the
prëce and wtU
enjag 2ero economic

dhL idivicdeal irm cann ot set he prie, how oloe he price

arise ?

lsPceis dekermined colsechvel bt he maahet supp

and oerrand
C Thi's men become he prevailig pce foY eRth ir
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rte
Rriee
Strdaitg

trdtvttut
Tndus
CMavueb) Frm

LE ne hm trie to char more man t e equi libriun prie.p

al me cutornes wìll Sormewhere elsc
a priee)
talier wil Come o his Wrnm, But, he eannot accomodate the ernhre

indushy demand Qeading to costs ug rochefng hee

he would Poreed to increae his pr'ee to P* to
Soe cushmers

This also mearns that Brm chArge p price regardless o t

demand p becomel Gms de man anre a well

an inclivideal birmn can decide on ikown i

e s there angning
petteeh yertecty tonpehhve mareef
a

ttod nth granitg toutput to prodsee

te wil ehocse an autout level which ail! mariai_e
his ov her
proit
Hous can we incor porahe his inovmah'on to ind the level ot
quanh fhat maxi mis e outpuf ?

Revenue (HA)
 PAGE NO,

DATE:

) Harg'inal Revenue
’ SuppOs e cost ot a edty bear ís s

1S

we e( ( heeg bear our

Price
is $s
ell 0Ur revenue

pe Demand
eHk
fedd bear
ateddgA
Adihonal Revenue arn ed
Rom selting edey bear (Me)is
ual o ik price

nertect comnpetior

argdnalCogt
nal osf cuyve Lo he indivclua
Brm's gaph
Price

pDemnet te

Ue qet the eorhbrium tuankt

 Prekswill be here til Pnite
Line
> Average Tolal Cos
cost Cure
O E Here we' also bring in re PAGE NO
Averege Totai( ost CUYVe ( Al) ay DArE

visualizahon proik wing ar^phs

Pr'e Priee

Total Revenue Total Cost Proht

In he short sun this wll be me cae but in he

’ this proht will attract more hrms
Jong
entev
fhe maeef

leading to teegNiNUg increue in he

indust supply leveiS mauing the inclthy price
levels b decye ue

Hence grapr in fe org van toitt tot ttue

pri ML
A1C

= Toal (osts .
e. Price

t In he
Aong perecty compehhve Grr's prohy
lways eual to 2er0