Perfect Competition and Equilibrium of the Firm under Perfect Competition

MARKET

Market is any place where goods and services are sold and bought. There are two types of markets.

• Perfect Competition

• Imperfect Competition
XI Economics Perfect Competition & Equilibrium of the Firm under Perfect Competition

Revenue Vs Average Revenue


PERFECT COMPETITION

Perfect competition prevails in the market when a large number of buyers and sellers exist and different units are homogenous.

Monopoly: Monopoly is that situation of the market when only one firm controls the whole supply of any commodity.

Duopoly: When there are only two firms in the market it is known as duopoly.

Oligopoly: When there are few firms in the market. It is more than two or less than ten producers.

EQUILIBRIUM OF THE FIRM UNDER PERFECT COMPETITION

Market is specified as perfect or imperfect according to the nature of competition prevalent in to the economy. Competition is said to be perfect if the following conditions are prevailing in the market.

• It is necessary there should be large number of buyers so that no buyer may influence the demand.

• There should be a large number of sellers that number of seller might influence the supplier.

• There will be complete perfect competition if the commodity is homogenous one.

• If competition is said to be perfect, it is necessary that there should not be any restriction on the entry of a new firm into the industry and an exit of an old one from the industry.

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