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Types of Market
Types of Market
Types of Market
of
MARKET
Index
• Definition.
• Features of Market.
• Classification of Market.
• Market Structure.
Definition
Homogeneous product.
No transport cost.
Uniform Price
Firm’s Equilibrium under Perfect
Competition-
An individual firm is said to be in equilibrium when 2
conditions are met :-
•Change in o/p doesn’t encourage firm
•Firm is earning max. profit
There are 2 methods of knowing equilibrium :-
i. Total Revenue and Total Cost method
ii. Marginal Revenue and Marginal Cost method
TR-TC Method :-
TC
TR
$385 Loss
Total cost, revenue
350
315 Maximum Profit
280 profit
245
210 dr = dc
175
140 dq dq
105
70
35 Loss
0
1 2 3 4 5 6 7 8 9 Quantity
MR-MC Method :-
Costs MC
60 MR=MC
50
40 A C
P = D = MR
30 B
20
10
0
1 2 3 4 5 6 7 8 9 10 Quantity
Perfect Competition can be in :-
i) Short Run
AC
E
P1 P= MR= AR
profit AVC
Q
Q2 Q2
0 * *
MC
Price, Revenue and Cost
AC
AVC
C B
loss
P4 P4= MR4= AR4
E
E D
Q
Q4
0 *
EB= Avg. Loss
Output
S h u t d o wn P o i n t - The
point where price is below AVC & as soon as firm attains this point it
should stop production so that loss = FC only.
MC
At P5, min AVC
Price, Revenue and Cost
(AR) = (AVC).
AC
Therefore the firm
should shut down.
AVC
loss
P5
S P5= MR5= AR5
Q
0 Q5
* utput
O
c) Normal Profit situation
MC
Price, Revenue and Cost
AR=AC
AC
P3
E P3= MR3= AR3
Q
Q3
0 *
P=AR=AC=MR=MC
Output
Perfect Competition can be in
ii) Long Run
LMC
COST
LAC
E
P LMR=LAR
Q
Imperfect
• In this market there are small no of
firms. Having Large no. of buyers and
sellers with product differentiation.
Imperfect competition in the short
run profit
E
Normal profit making situation in
Imperfect competition
E
loss making situation in Imperfect
competition
E
Imperfect competition in
Long run profit
E
Monopolistic
A few sellers.
Homogeneous Product.
Interdependence.
Advertisement and sales promotion costs.
CONT…
…CONT
E
Normal profit situation
E
Loss incurring situation
E
During long period
Profit making situation
E
Thank You