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MARKET STRUCTURE AND

PRICING PRACTICES
Current News
Take –away of today’s lecture
Learning Outcomes

• To understand the various forms of market in the


real world.
• To analyze the price and output determination
under various markets.
• To clarify all issues with a case let.
What is Market?????
Market Structure

Perfect Competition
Monopoly
Monopolistic Competition
Oligopoly
Perfect Competition
• Large number of sellers
• Firms are price takers
• Product is homogeneous
• Perfect mobility of resources
• Perfectly Elastic Demand
• Economic agents have perfect knowledge
• AR=MR
• No Advertisement Cost
Perfect Competition: Short-Run
Equilibrium
Perfect Competition: Long-Run
Equilibrium
Case Study
MCQ of Perfect Competition

1 . In perfect competition :
A) AR>MR
B) AR<MR
C) AR=MR
D) All of these
2. Perfect competition is identified by:
A) Large no of sellers
B) Many seller
C) One seller
D) Two sellers
3. In the long run in perfect competition a firm will earn
A) Supernormal profits
B) Normal profits
C) Loss
D) No profit and no loss
4. If a seller under perfect competition wants to sell more he can do it
A) By lowering the price
B) By increasing the price
C) By keeping the same price
D) All of these
5. Under perfect competition the price is to be determined by
A) Firm
B) Industry
C) Both firm and industry
D) By consumers
6. In case a firm earns supernormal profit, then
A) AR=AC
B) AR<AC
C) AR>AC
D) MC>AR
Time to answer