class 12 microeconomics Different forms of market notes

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Market forms....... short and easy notes for the board exam.


1. What do you mean by market? What are its features?
> Entire area where buyer and seller of a commodity are inclose contact to each other, is called market.
Following its features;
  • One area - where wire and seller are present and compete with each other.
  • Presence of buyer and seller - it is compulsory of the presence of buyer and seller to purchase and sell the commodity.
  • One commodity - in economy, every commodity has different market.
  • One price of commodity - market contain one single price of commodity. Due to competition between buyers and sellers.

2. What is perfect competition? What are its Essential elements or features?
> It is the situation in which a large number of buyers and sellers are found for homogeneous product. In perfect competition, a single market price prevails for the commodity.
Following are its feature;

  • Large number of buyers and sellers.
  • All goods are homogeneous in nature.
  • Free entry and exit of firm.
  • Factor of production are freely mobile.
  • There are no transportation cost.
  • Perfect knowledge of the market for everywhere sensitive.

3. What do you mean by pure competition?
> following features are found in pure competition;
  • Large number of buyers and sellers.
  • The units sold in the market by all seller are homogeneous.
  • Free entry or exit of the firm into the industries.

4. Under perfect competition, a firm is price taker not price maker.
> Due to large number of buyers and sellers in perfect competition, individual for become unable to affect the price. Because, it has a very small share in the supply of industries. They do not imposition to affect the price. In perfect competition, a firm cannot alter the price but it can scale and produce in any quantity. So, the firm only price taker not price maker.




5. What is monopoly? What are its features?
> Monopoly means single seller in the market. A firm has full control on the supply of commodity.
Following are its features;

  • Single seller and large number of buyers.
  • Producer such commodity, which has no close substitute.
  • Monopolistic firm, itself price maker.
  • No entry of new firm.
  • Demand curve negatively sloped. Marginal revenue is less than average revenue.
  • Possibility of price discrimination.
6. What do you mean by monopolistic competition? What are its Essential elements?
> In a real life, we do not have perfect competition or monopoly. Monopolistic competition are found in real life. Competition is the situation, in which Limited number of buyers and sellers are found to sale non homogeneous product.
Following are its Essential elements;
  • Large number of buyers and sellers.
  • No identical product but close substitute to each other.
  • Unrestricted entry and exit of the firm.
  • There are same selling cost.
  • Imperfect knowledge of the market.
  • Non price competition.
  • Firm decide price and quantity of product.
7. What do you mean by oligopoly? What are its features?
> it is a form of imperfect competition. In which there are only few firms in the market. Producing either homogeneous product or product differentiation.

8. Difference between perfect competition, Monopoly and monopolistic competition.




POINTS;

1. Features of market;

  • One area.
  • Presence of buyers and sellers.
  • Single price of commodity.
  • In monopoly, only one seller.
  • In monopsony, only one buyer.
2. Features of monopolistic competition;
  • Differentiated product.
  • Selling cost.
  • Imperfect knowledge of market.
  • In perfect competition, there is free entry and exit of the firm.
3. In perfect competition, there are a large number of buyers and sellers.
4. Concept of monopolistic competition, given by chamberlain.
5. In monopoly, marginal revenue is less than average revenue (MR < AR)
6. In perfect competition, average revenue is equal to marginal revenue ( AR = MR )
7. Homogeneous product is the features of perfect competition.
8. In perfect competition, firm is price taker.
9. In monopoly, price discrimination are found.
10. There is a inverse relation between price and demand of the product of the firm. Under both Monopoly and monopolistic competition.

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