price-output determinant ion under

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PRICE - OUTPUT

DETERMINANTION

UNDER

DIFFERENT MARKET

FORMS



MARKET & ITS

CLASSIFICATION

The term Market in Economics has no

reference to a particular place. By Market we

mean the buyers & sellers of a particular

commodity who have some contact with eachother.

Classification of Market can be:

1. On the basis of area.

2. On the basis of time element.3. On the basis of competition.



PERFECT COMPETITION:

1. Large no, of buyers & sellers.

2. Homogenous product.

3. Freedom of entry & exit.

4. Perfect Knowledge.

5. Perfect mobility.

6. No transport cost.

7. Absence of Artificial Restriction.



PRICE DETERMINATION

UNDER

PERFECT COMPETITION:

1. Classical Approach.2. Austrian Approach.

3. Synthesized Approach.



Equilibrium of firm under perfect

competition:

Equilibrium of a firm:

A firm is said to be in equilibrium when it has no

tendency to change its level of output. A firm will

arrive at this equilibrium level of output at whichit maximizes its profit.

where,

Profit = TR ± TC



APPROACHES TO DETERMINE THE

LEVEL OF OUTPUT:

1. Total Revenue & Total Cost Approach.

2. Marginal Revenue & Marginal Cost

Approach.



MONOPOLY:

The word µMonopoly¶ means ³alone to sell´.

Thus monopoly is a situation in which there is a

single seller of a product which has no close

substitute.

1. Single Seller.

2. Monopoly is also an industry.

3. No close substitute.

4. No entry of new firms.

5. Price Control.

6. Different Average & Marginal Revenue curves.

7. Small Selling cost or Marginal cost.



EQUILIBRIUM OF FIRM UNDER

MONOPOLY:

1. Total Revenue & Total Cost Approach.

2. Marginal Revenue & Marginal Cost

Approach.



ESSENTIAL CONDITIONS FOR

PRICE DISCRIMINATION:

1. Difference in elasticity of demand.

2. Discriminating firm should be monopolistic.

3. Lack of communication among buyers

4. Restriction of entry.

5. Purchasing Power of the consumer.

6. Exploiting preference & prejudice of buyers.

7. Transport Cost.

8. Legal Sanction.



NON PRICE COMPETITION:

1. Product Variation.

2. Advertising.



OLIGOPOLY:

Oligopoly is an important form of imperfect

competition where there are a few firms in the

market producing either homogenous products or

close substitutes.

It is also referred to as µLimitedcompetition¶, µincomplete monopoly¶, µmultiple

monopoly¶ etc.



FEATURES OF OLIGOPOLY:

1. Monopoly Power.

2. Interdependence.

3. Indeterminate Demand Curve.

4. Role of selling costs.

5. Conflicting attitude of firms.

6. Lack of uniformity.

7. Price rigidity.



1. On the basis of product differentiation:

Pure vs. Differentiated Oligopoly.

2. On the basis of possibility of entry:

Open vs. Closed Oligopoly.

3. On the basis of price leadership:

Partial vs. Full Oligopoly.

4. On the basis of agreement among sellers:

Collusive vs. Non collusive Oligopoly.

5. On the basis of centralized selling:

Syndicated vs. Organized Oligopoly.

CLASSIFICATION OF

OLIGOPOLY:

price-output determinant ion under

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