Forms of Market

   Micro economics

                  Forms of Market 

~ Perfect Competition: It is a form of market where    there is large number of buyers ans sellers of commodity. 

  Homogenous product is sold and its price is determined by the forces of supply and demand. 

An individual buyer or seller has no control over price. 

Features of Perfect Competition:

1. Large Number of Firms or Sellers

2. Large Number of Buyers

3. Homogenous Product

4. Perfect Knowledge

5. Free Entry and Exit of Firms

6. Perfect Mobility

Conclusions:-

• A firm under perfect competition is a Price Taker, not a price maker. 

• Demand curve of the firm under perfect competition is Perfectly Elastic. 

• A firm under perfect competition earns only normal profits in long run. 

~ Monopoly: It is a form of market in which there is single seller or producer of a commodity.

There are no close substitute of the monopoly product and there are legal, technical or natural barriers to the entry of the firms in the monopoly market.

A Monopolist has complete over the price and can also practice price discrimination. 

Features of Monopoly:

1. One Seller and Large Number of Buyers

2. Restrictions on the Entry of New Firms

3. No Close Substitute

4. Full Control Over  Price

5. Possibility of Price Discrimination

Demand curve of Monopoly Firm-

~ Monopolistic Competition: It is a form of market in which there are many buyers and sellers of the product, but each seller is different from that of other. 

It includes features of monopoly and perfect competition. 

 Features of Monopolistic Competition:

1. Large Number of Buyers and Sellers

2. Product Differentiation

3. Freedom of Entry and Exist 

4. Lack of Perfect Knowledge

5. Non-price Competition

Demand curve of Monopolistic Competition-

~ Oligopoly: It is a form of market in which there are a few big firms and a large number of buyers of a commodity. Example There are only few car producers in Indian Auto Market- Toyota, Ford, Volkswagen, GM, BMW and Audi are some well known brands. 

Price and output decisions of each producer significantly impacts the price and output decisions of the other producer. 

Features of Oligopoly:

1. Small Number of Big Firms

2. High Degree of Independence

3. Entry Barriers

4. Non-price Competition

5. Not Possible to Determine Firm’s Demand Curve

Note: Author does not claim over work! Work is derived from various sources.

 

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CONSUMER EQUILIBRIUM - MICRO ECONOMICS CLASS 11 COMMERCE - Kalindi Chokshi

CONSUMER EQUILIBRIUM 

(Utility Analysis)

1. UTILITY is the want-satisfying power of a commodity.

2. TOTAL UTILITY is the sum total of the utilities derived from the consumption of different units of a commodity.

3. MARGINAL UTILITY is additional utility when a unit more of a commodity is consumed.

MEASUREMENT OF UTILITY:

-Cardinal Measurement of Utility refers to the measurement of utility in terms of units like 2, 4, 6 and 8

-Ordinal Measurement of Utility refers to ranking of utility, comparing or expressing the utility in terms of higher, lower or equal to level of satisfaction across different situation.

RELATIONSHIP BETWEEN TU AND MU :

1.When MU diminishes, TU tends to increase at a diminishing rate.

2.When MU is zero, TU is maximum.

3.When MU is negative, TU starts 

diminishing.

LAW OF DIMINISHING MARGINAL UTILITY:

It states that marginal utility tends to diminish as more and more (standard) units of a commodity are (continuously) consumed by a consumer.

CONSUMER EQUILIBRIUM refers to situation when a consumer gets maximum satisfaction by spending his given income across different goods and services.

 

ASSUMPTIONS of Consumer’s Equilibrium :

1.Consumer behaves rationally, and aims at the maximum of his satisfaction.

2 Utility can be expressed in cardinal numbers, like 1, 2, 3...

3. Utility of a commodity does not get affected by the consumption of other goods.

4Marginal utility of money remains constant. 

CONDITIONS of Consumer’s Equilibrium : 

Rupee worth of satisfaction should be the same across all goods purchased by the consumer and equal to the marginal utility of the money.

Marginal utility of money remains constant.

Law of diminishing marginal utility hold good.

PRINCIPAL LIMITATION of Utility Analysis relates to its basics assumption that utility can be expressed in terms of cardinal numbers like 1, 2, 3.

- KALINDI CHOKSHI.

NOTE: The author does not claim the content. It has been made on PRIMARY research and studies. 

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ALL STATISTICS FORMULA IN ONE - CLASS 11 COMMERCE.

ALL THE FORMULAS OF CLASS 11TH COMMERCE STATISTICS . 

- Drashti Panjrolia ( handwritten notes) ( does not claim any originality of work- derived from various sources) 

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class 11th commerce notes for free ( Economics)- Drashti Panjrolia

what is Economy and its types 

Economy: - An economy is a system of organizations and institutions that either facilitate or

play a role in the production and distribution of goods and services in a society. Economies

determine how resources are distributed among members of a society; they determine the value

of goods or services; and they even determine what sorts of things can be traded or bartered for

those services and goods.

Three Types of economy:

1. Market/capitalist economy: - In this type of Economy the factors of production are

owned and operated by individuals or group of individuals. Main objective of production is self

interest or profit maximization. Central problems are solved by price mechanism or market

forces of demand & supply.

2. Planned/centrally planned/ socialistic economy: - Factors of production are owned and

operated by Govt. Main objective of production is social welfare. Central problems are solved by

central planning authority.

3. Mixed Economy: - The Economy in which factors of production are owned and

operated by both Govt. and private sector. Main objective is profit maximization (private sector)

and social welfare (Government sector). Central problems are solved by central planning

authority(in public sector) and price mechanism (in private sector)

Economics: - Economics is a branch of social science focused on the production, distribution

and consumption of goods and services. The origin of economics can be traced to Adam

Smith’s book, ‘An inquiry into the Nature and Causes of Wealth of Nature’ published in the

year 1776. Economics was used to mean home management with limited funds available in the

most economical manner possible.

The word 'economics' comes from two Greek words, 'eco' meaning home and 'nomos' meaning accounts. The subject has developed from being about how to keep the family accounts into the

wide-ranging subject of today.

Economics is actually:-

• economics is about the study of scarcity and choice

• economics finds ways of reconciling unlimited wants with limited resources

• economics explains the problems of living in communities in terms of the

underlying resource costs and consumer benefits

• economics is about the co-ordination of activities which result from specialisation

Definition of Economics: - Robbins emphasises that economics is a study of human

behaviour, where there is a relationship between ends and scarce means and that the scarce

means have alternative uses.

Samuelson’s definition of economics is most comprehensive, relevant and accepted. The

definition includes both the aspects of economics, i.e., distribution of limited resources and

problem of economic development.

Note: The author does not claim any originality of this work. This information is collected from various books as read by author.

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