market in microeconomics

Welcome to Presentation

Md. Marufur Rahman

ROAD MAP:• DEFINITION OF MARKET

• FEATURES OF MARKET

• MARKET STRUCTURE

• FEATURE OF COMPETITIVE MARKET & MONOPOLY MARKET

WHAT IS MARKET?Generally market is the place where buyers and sellers are physically present and finalize the transaction.

Prof Stonier and Prof Hague:-

By a market economist mean any organization whereby buyers and sellers of a goods are kept in close touch with each other.

FEATURE OF MARKET:• Buyers and Sellers:- Buyers and Sellers are must for

market. In Transaction Physical Presence is not necessary.

• One Area:- Denote to a area or a region in which no of buyers and sellers are scattered. They are connected with one another via brokers, agents, letters. Etc.

• One Commodity:- For the existence of a market there should be at least one commodity like Wheat, vegetables, etc and the market is termed as wheat market, vegetables market and so on.

CONT…

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• Perfect Competition:- According to Prof. Coornot, market must posses the characteristic of perfect competition where in buyers and sellers are free to enter in the market.

• One Price:- In Perfect competition between buyers and sellers. The market area should have one price only.

MARKET STRUCTURE:

PERFECT COMPETITION:

A market form where there are many firms that sell a certain homogenous product.

A single firm can not influence the market price.

It is a hypothetical situation; it cannot exist in real case scenario. In this nobody can influence the prices, including

buyers and sellers

Example: Foreign exchange markets, Rural agricultural markets.

Features of Perfect Competition:

a large number of sellers and buyers

having homogenous product and

there is single price in the market

Freedom of Entry and Exit; this will require low sunk costs.

All firms are price takers, Therefore firm’s demand curve is

perfectly elastic.

Perfect Competition Curves:

MONOPOLY:

• A market situation where there exists a single seller selling such a good which has no close substitutes.

• They are the PRICE SETTERS.

• A single seller exists for a product. i.e. 100% of market share.

• Example: Bangladesh railways, Bangladesh post office

Features of Monopoly

• Single seller• Large number of buyers• No close substitutes• Price discrimination• No selling costs• Relatively inelastic demand curve• AR>MR• AR&MR curves are downward sloping• No free entry and exit of firms

Monopoly Curves