UNIT III.pptx Different types of market.

UNIT III.pptx Different types of market.

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  UNIT III DIFFERENT TYPESOF MARKET PREPARED BYPREPARED BY : Dr. N. Prem Anand Prof., Director Sri Ramakrishna College of Arts & Science
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  Different Types ofMarket and Its Price Determination
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  5. Summary Table 3.Monopolistic Competition 1. Perfect Competition CONTENTS 2. Monopoly 4. Oligopoly
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  01 Perfect Competition
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  Perfect Competition Features 2 •Perfect knowledge of market conditions • Market equilibrium is achieved when quantity demanded = quantity supplied. • Price is determined by demand and supply in the industry. • Free entry and exit 1 • Price remains constant; firms can sell any quantity at the market price. • Large number of buyers and sellers Price Determination • No control over price by individual firms • Firms are price takers. • Homogeneous (identical) products
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  02 Monopoly
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  • The monopolistsets the price, considering the demand curve. • Full control over price • High barriers to entry Features Price Determination • Single seller, no close substitutes • Can charge higher prices and earn abnormal (supernormal) profits in the long run. • Price is set where marginal cost (MC) = marginal revenue (MR). • Price discrimination may exist Monopoly
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  03 Monopolistic Competition
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  • In thelong run, only normal profit is earned as new firms enter the market. 2 • Each firm faces a downward-sloping demand curve. • Free entry and exit • Firms set prices based on cost and perceived value. • Some control over price due to brand loyalty • Many sellers, but each sells differentiated products Monopolistic Competition • Price is set where MC = MR, but due to differentiation, price > MC. • Non-price competition (e.g., advertising) Price Determination Features 1
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  Oligopoly 04
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  • Interdependence amongfirms • Few large firms dominate • Kinked demand curve may occur, leading to price rigidity (sticky prices). • Possibility of collusion or price wars • No single method; pricing may be: • High barriers to entry • Collusive (Cartel): Firms agree on price (like OPEC). • Products may be homogeneous (like steel) or differentiated (like cars) Oligopoly • Non-collusive: Firms consider rivals' reactions when changing prices. Price Determination Features
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  Summary Table 05
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  Market Type No.of Sellers Product Type Price Control Price Determination Perfect Competition Many Homogeneous None By demand & supply Monopoly One Unique Full Where MC = MR Monopolistic Competition Many Differentiated Some Where MC = MR; price > MC Oligopoly Few Homogeneous/Differentiated Some/Joint (collusion) Strategic, depends on market conduct Summary Table
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  Thank You