PERFECT COMPETITION

UNDER

WHAT IS MARKET?

T YPES OF MARKET Monopoly Duopoly Oligopoly Monopolistic competition Perfect competition

PERFECT COMPETITION

M arket structure where competition

among sellers and buyers prevails in its most perfect form.

F E AT U R E S

Large number of sellers and buyers Price taking Product homogeneity

Free entry and exit

ASSUMPTIONS

Perfect Knowledge Perfect mobility of factors of production No transport cost No intervention by the government Rational behavior Single price

DETERMINATION OF EQUILIBRIUM PRICE AND EQUILIBRIUM QUANTITY UNDER PERFECT COMPETITION

DETERMINATION OF EQUILIBRIUM PRICE Under perfect competition, equilibrium price is determined by the forces of : 1. Market demand 2. Market supply

TABLE : PRICE DETERMINATION UNDER PERFECT COMPETITION

Price (Rs)
5 4 3 2 1

Market Demand Units 10 20 30 40 50

Market Supply Units 50 40 30 20 10

Pressure on Price

DS DS D=S DS DS

Fig . 1

THREE BASIC ASSUMPTIONS

Price and Quantity supplied are positively related or that supply curve of a commodity slopes upwards from left to right. Price and Quantity demanded are negatively related, or that demand curve of a commodity slopes downward from left to right. Forces of supply and demand operate freely without any government intervention.

What happens when price becomes higher or lower then the Equilibrium Price ?

IMPORTANT OBSERVATIONS.
Price under perfect competition is determined by the industry, not by an individual firm. Price under perfect competition is known as equilibrium price because it corresponds to equilibrium of the industry. An individual firm under perfect competition cannot change the equilibrium price.

CONTI

Excess demand occurs when, corresponding to the existing price, demand for commodity is greater than its supply (D S).

Excess supply occurs when, corresponding to the existing price, supply of a commodity is greater than its demand (S D).

SAY HELLO TO EBAY

Online marketplace Large scale trade of varied items 3 segments -market places - payments - communications Source of revenue

BUSINESS SEGMENTS

Market places
-Commerce platform

Payments
-Pay pal

Communications
Skype
Bill Me Later

CONTI.. Traditional auction style format Fixed price i.e. buy it now

WHY EBAY PERFECT COMPETITION Products on the web site are available at prices better than those one can find in traditional or online stores. i.e. large buyers Anyone can sell nearly anything i.e. large sellers Transaction by individual buyer and seller is very small therefore they are price takers. Limit to each user for listing the product so no chance of monopoly No possibility of economies of scale

CONTI..
Competitive advertising does not occur because the products are categorized and sub- categorized into homogeneous products. Entry and exit as a business in eBay is quite easy. No browsing cost for buyers and the eBay fee schedule identical selling costs for all the sellers. Rational behavior and the part of sellers and buyers ,eg: play station 3.

CURRENT STATUS
SAURABH SINGHH

E-BAY

AND

PERFECT

COMPETITION

eBay is a place to buy ,sell and window shop. The products on the website have prices better than traditional or other online stores. Individual seller ,small retailer or big company all are sellers and can sell nearly anything by listing their items on eBay. Huge variety of things are available with enormous details

CONTI
Buyers and sellers both are price takers. Only 10 simultaneous listing for identical good is allowed ,so no possibility of economies of scale. Competitive advertising does not occur as products are categorized and sub categorized into homogeneous ones. Entry and exit as a business on eBay is very easy. Several sellers of common products and several buyers are features of eBay.

BUYERS ADVANTANGE OF EBAY

EASY AVALIBILIT Y - Whatever you want to buy, whether its large or small, cheap or expensive, everyday or just plain weird, the chances are you can find it on eBay.

AN online marketplace where you can buy things from all over the world, without leaving your home. You can get things that you would never think anyone would bother to sell, and you can get them cheaply. The powerful search engine means that you can find things you will like without even knowing exactly what you are looking for.

CONTI...
Money can be send quickly and electronically to almost all of these sellers, without worrying about currency conversion or exchange rates or anything else. For bargains, eBay is an ideal place to buy.

WHY A SELLER WANTS TO SELL THROUGH INTERNET.?

Time ef feciency Cost ef fency Ef fective supply chain management Ef fective communication and flow of information.

HOW TO SELL THROUGH EBAY?

Create a sellers account Prepare your item List the item for sale Track your listing Receive payment and complete the sale.

SHIVAM

GROUP.MEMBERS
ABHISHEK TIWARI ANKITA CHHEDA AKSHAY MALL KINJAL THAKKAR RAHUL JHA RUBY GABRA SAGAR TUNIYA SAURABH SINGH SHASHIKANT MISHRA SHIVAM TRIVEDI SWATI DESHMUKH VIDHA SHARMA

THANKYOU