PERFECT

COMPETITI
ON
MARKET
 OUR TEAMS

FEBY MELIA MUHAMMAD MUHAMMAD

PURNOMO FAHRI HANIEF
BACTIAR ARIFIN
20080574090 20080574065 20080574078

TSINTA ZHAFIRA
ALFIYATIN FRIANA
NI’MAH
20080574114 AZZAH
20080574073
 TABLE OF CONTENTS

01 02 03
DEFINITION CHARACTERISTIC ADVANTAGES
&
DISADVANTAGES

04 05 06
DEMAND FORMULAS EXAMPLE OF
& & QUESTION
SUPPLY TABLES
 01.
DEFINITION
 Perfect competition market is a
market structure in which there are
many sellers or companies that
produce goods or provide services to
buyers in the market homogeneous
products sold.
 02.
CHARACTERISTI
C
 Freedom to Sellers and buyers
open and have perfect
close knowledge of the
companies market
CHARACTERISTIC
OF PERFECT
COMPETITION
MARKET

The company Homogeneous Mobility or

is the price goods movement of
taker economic
resources is
quite perfect
03. ADVANTAGES &
DISADVANTAGES
 ADVANTAGES AND DISADVANTAGES OF PERFECT
COMPETITION MARKET
ADVANTAGES DISADVANTAGES
 There is no competition in this  There are no funds to carry out
market because the products sold research or product development
are homogeneous or similar so that innovation is minimal

 Sellers don’t need to advertise for  Buyers experience limitations in

promotion
 The price of goods and services
sold are determined by all sellers
and buyers simultaneously and
generally prices tend to be stable
choosing goods or services
because the products sold are the
same and have the same quality
 Workers tend to receive low
wages or salaries

 Able to drive efficiency in  Often there is an imbalance in the

production income distribution of each
producer which result in a conflict
of justice
04. DEMAND
AND
SUPPLY
In the perfect competition
market, the price of a commodity
is determined only by the
intersection of the market
demand curves. Companies in
the perfect competition market
are “price taker” and can sell
any quantity of the commodity at
a fixed price.
“d” is the demand curve faced
by the average firm in a
perfectly competitive market.
“d” is infinitely elastic or
determined by the horizontal
line at the market equilibrium
price of $8 per unit. This
means that the company can
sell any quantity of the
commodity at that price.
“S” shows the fixed market
supply for a commodity in a
market period. If the market
demand curve for the
commodity is determined by
D, then the market equilibrium
price is $8 per unit in the
market period. If the demand
curve is D’ , the equilibrium
price becomes $24.
05. FORMULAS
AND
TABLES
FORMULAS OF PERFECT COMPETITION
MARKET
1 2 3

TOTAL REVENUE AVERAGE REVENUE MARGINAL

Full amount of total sales Total revenue divided by the
of goods and services. number of outputs
(products sold).
TR = P × Q AR = TR / Q = (P.Q)/Q
REVENUE
Changes in total revenue
from each sale of one
additional unit of
product.
TR / TQ= (TR2 – TR1) / (Q2 – Q1)
TABLES OF PERFECT COMPETITION
PRODUCT SELLING MARKETREVENUE
TOTAL PRICE
TOTAL AVERAGE MARGINAL

(Q) (P) TR = (P × Q) AR = (TR/Q) MR = (TR/Q)

1 unit $6 $ 6 $6 $6
2 unit $6 $12 $6 $6
3 unit $6 $18 $6 $6
4 unit $6 $24 $6 $6
5 unit $6 $30 $6 $6
6 unit $6 $36 $6 $6
7 unit $6 $42 $6 $6
8 unit $6 $48 $6 $6
06. EXAMPLE OF
QUESTION
EXAMPLE OF PERFECT COMPETITION MARKET
QUESTION
An operating company in a perfectly competitive
market has the following cost structure:
- Marginal Cost : 3 + 2Q
- Average Variabel Cost : 3 + Q
- Fixed Cost : 3
- Product : Rp 9/unit
calculate the amount of output that must be sold in
order to get the maximum profit, and how much is the
maximum profit?
SOLUTION

- VC = AVC.Q - TR =P×Q
= (3 + Q) × Q =9×Q
= 3Q + Q² = 9Q

- TC = FC + VC - MR = TR’
= 3 + 3Q + Q² =9

- MC = TC’
= 3 + 2Q

Max. profit

- MR = MC - TC = 3 + 3Q + Q²
9 = 3 + 2Q = 3 + 3(3) + (3) ²
2Q = 9 – 3 = 21
Q=3
- Laba = TR - TC
- TR =P×Q = 27 - 21
=9×3 =6
= 27

So, the company needs to spend 3 units of output to get a

maximum profit of 6.
THANK Any
YOU ^^ Questions
?