Managerial Economics and Financial Analysis

Unit – 3 Module – 3.1

Markets

Mrs. K.V.S.Praveena
Assistant Professor
Vignan’s Institute of Information
Technology
 Managerial Economics and Financial Analysis

Contents
• Market – Definition
• Market Structure - Features
• Types of Competition
• Key terms

Outcomes
• Student would be able to understand about
Market Structure.
• Student would be able to analyze the
Competitive situation market situations.
 Managerial Economics and Financial Analysis

Definition
Market is defined as a place or point at
which buyers and sellers negotiate their
exchange of well-defined goods or services.

The Market Structure refers to the

characteristics of the market either
organizational or competitive, that describes
the nature of competition and the pricing
policy followed in the market.
 Managerial Economics and Financial Analysis

Market Structure - Features

The structure of market is based on the

following features :

• The degree of seller concentration

• The degree of buyer concentration
• The degree of product differentiation
• The conditions of entry into the market
 Managerial Economics and Financial Analysis

Types of Competition
• Based on degree of competition, the
markets can be divided into Perfect markets
and Imperfect markets.
• In Perfect markets, there is said to prevail
Perfect competition.
• In case of Imperfect markets it is
Imperfect competition.
 Managerial Economics and Financial Analysis

Market structure

Perfect Imperfect
Competition Competition

Monopolistic
Monopoly Duopoly Oligopoly Competition
 Managerial Economics and Financial Analysis

Types of Market Structure

Managerial Economics and Financial Analysis

Key terms
Total Revenue is the revenue earned
by producing and selling ‘n’ number
of units.
Average Revenue is the total revenue
by the number of units sold.
Marginal Revenue refers to the
change in revenue by producing and
selling one more unit.
Managerial Economics and Financial Analysis

Key terms
 Average Cost is the per unit cost of
production obtained by dividing the
total cost (TC) by the total output (Q). 
Marginal cost is the change in
the total cost that arises when the
quantity produced is incremented by
one unit; that is, it is the cost of
producing one more unit of a good.
 Managerial Economics and Financial Analysis

Quiz
1. ------------is the revenue earned by
producing and selling ‘n’ number of
units.
2. ------------is the total revenue by the
number of units sold.
3. --------is the per unit cost of production
obtained by dividing the total cost (TC)
by the total output (Q). 
Answers
4. Total Revenue 2. Average Revenue
3. Average Cost
Managerial Economics and Financial Analysis

Summary
• What is a market?
• Market structure
• Types of Market structure
• Types of competition
•Key terms used
Managerial Economics and Financial Analysis

Thank you