PERFECT COMPETITION

MARKET

December 7, 2021 PRAVIN SAMDANI

 PERFECT COMPETITION MARKET
 Definition:- Perfect competition market
is the market where large number of
buyers and sellers sells identical product
and free entry of the firm in the
industry.

December 7, 2021 PRAVIN SAMDANI

 SALIENT FEATURE OF THE PERFECT
COMPETITION MARKET
I. Large number of the buyers and sellers
II. Identical product
III. Free entry and exit of the firm in the industry
IV. Prefect knowledge of the market to the
buyers and the sellers
V. Perfect mobility of the factor of the
production
VI. No transportation cost
VII. Single price

December 7, 2021 PRAVIN SAMDANI

 Price determination under p.c.m.
 There are two method to find the
price equilibrium in the p.c.m.
i. Total cost and total revenue (TC&TR)
ii. Marginal cost and marginal revenue
(MC&MR)

December 7, 2021 PRAVIN SAMDANI

 Price determination under p.c.m.
 TC & TR METHOD- In this method the
equilibrium price is that point where the
difference between TC & TR is
maximum.

December 7, 2021 PRAVIN SAMDANI

 Price determination under p.c.m.
 MC & MR METHOD:- In this method the
equilibrium price is that point where
MC&MR is equal and MC curve must cut
MR curve from down,not upward.

December 7, 2021 PRAVIN SAMDANI

 Price determination under P.C.M.
in short run period
 There may be three condition in
perfect competition market.
I. Profit
II. Loss
III. Normal profit

December 7, 2021 PRAVIN SAMDANI

 Price determination under P.C.M.
in long run period
 There is only one condition is possible
in the perfect competition and this is
normal profit means no profit and no
loss.

December 7, 2021 PRAVIN SAMDANI

December 7, 2021 PRAVIN SAMDANI