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Questions
What are the features of perfect competition.
Explain the features of perfect competition.
Solution
Meaning:- A perfect competition is a market situation where there are large number of buyers and sellers buying and selling homogeneous products at single uniform price. Perfect competition is an idealistic concept and not a real one. Perfect competition may be applicable to certain products and that too for a certain period, and may be in a selective part of the market.
Features of perfective competition:-
1. Large number of buyers and sellers:-
There exist large number of buyers and sellers in a perfectly competitive market. The number of buyers and sellers are so large that a single buyer or a single seller can’t influence (manipulate) the price or output through his action.
2. Homogeneous Product:-
The products sold in market are homogeneous, that is identical in its taste, shape, size, colour, design, quality etc.
3. Freedom of entry and exit:-
There is freedom of entry and exit to the firms under perfectly competitive market. Any firm (buyer or seller) can enter the market or exit from the market as and when he wants.
4. Perfect Knowledge:-
Buyers and sellers must have a perfect knowledge about the market conditions. They should have complete information about the price at which goods are bought and sold and the place where the transactions take place etc.
5. Perfect mobility of factors of production:-
The Factors of production are perfectly mobile in the sense that they are completely free to move from one industry to another or from one market to another or from one occupation to another.
6. Absence of transportation cost:-
It is assumed that all the sellers are equally near or far away from the markets, and as such there are uniform transport coasts to all the sellers. So, it is assumed that the transport cost is absent or constant for all the sellers.
7. Absence of Government Intervention:-
There is no government intervention in respect of production, transportation and exchange of goods.
8. Uniform price:-
There exist a single uniform price in the market and it is determined by the forces of demand and supply.
9. Demand curve of the Firm:-
Since the firm is a price taker it can sell any amount of the commodity at the prevailing price. Thus the demand curve facing the horizontal line.
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Group B
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Monopolistic Competition
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Under perfect competition commodities are ________________ in nature.
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Answer the following question.
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Answer the following question.
Elaborate three main features of a monopoly form of market.
In an economic sense, the market includes the following activities
- The place where goods are sold and purchased.
- An arrangement through which buyers and sellers come in close contact with each other directly or indirectly.
- A shop where goods are sold.
- All of the above.
Features of oligopoly market:
- There are few firms or sellers.
- Sellers sell differentiated product.
- There is free entry and exit of firms.
- There is considerable element of uncertainty in this type of market.
Find the odd word
Selling cost -
PASSAGE
In India, markets for automobiles, cement, steel, aluminium, etc, are the examples of oligopolistic market. In all these markets, there are few firms for each particular product. Duopoly is a special case of oligopoly, in which there are exactly two sellers. Under duopoly, it is assumed that the product sold by the two firms is homogeneous and there is no substitute for it. Examples where two companies control a large proportion of a market are: (i) Pepsi and Coca-Cola in the soft drink market; (ii) Airbus and Boeing in the commercial large jet aircraft market.
Operating systems for smart phones and computers provide excellent examples of oligopolies in big tech. Apple iOS and Google Android dominate smart phone operating systems. Computer operating systems are overshadowed by Apple and Microsoft Windows.
- Give examples of oligopolistic market in India (1 mark)
- Explain the concept of duopoly with a suitable example from the passage (1 mark)
- Express your personal opinion based on the above information (2 marks)
In which one of the following types of markets are Average Revenue curve and Market Demand curve the same?
