Ayussh Sanghi is teaching live on Unacademy Plus
INTRODUCTION TO INDIAN ECONOMY 1.13 TYPES OF MARKET PRESENTED BY AYUSSH SANGHI
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WHAT IS COMPETITION? What does competition mean? o Competition can be defined as one where sellers of the same commodity compete for the same buyers.
VARIOUS TYPES OF COMPETITION PERFECTLY COMPETITIVE MARKET MONOPOLY IMPERFECT MARKETS
WHAT IS PERFECTLY COMPETITIVE MARKET? A perfectly competitive market is necessarily one that has the following characteristics: o multiple buyers and many sellers in the market. o goods offered by the various sellers are largely the same. o free entry or exit to firms in the market.
WHAT IS PERFECTLY COMPETITIVE MARKET? According to the above mentioned attributes, the actions of any single buyer or seller in the market have a negligible impact on the market price. Each buyer regulated by the market. and seller takes the price as
WHAT IS MONOPOLY? o Let's understand through an example You own a laptop, it probably uses a version of Windows, the operating system developed by the Microsoft Corporation. When Microsoft first designed Windows many years ago, it applied for and received a copyright from the government. o This copyright gives Microsoft the exclusive right to make and sell copies of the Windows operating system Hence if a person wants to buy a copy of Windows he has to pay Microsoft the said amount tha product. Microsoft is said to have a monopoly in the market for Windows. t the firm has decided to charge for its
WHAT IS MONOPOLY? A monopoly such as Microsoft does not have any close competitors and, therefore, can charge the market price for its product as well as influence it. Hence the main difference is,"A competitive firm is a price taker, whereas a monopoly firm is a price maker ."
REASONS FOR MONOPOLY A firm is considered to be running a monopoly if it is the sole seller of its product. Its product cannot be easily substitutable. o The main reason of monopoly is barrier to entry for other firms that can give competition. In a monopoly the firm remains the only seller in its market because other firms cannot enter the market and compete with it.
REASONS FOR BARRIERS TO ENTRY An important source is owned by a single firm The government has given a single firm the exclusive right to produce some good or service. The costs of production make a single producer more efficient than a large number of producers.
MONOPOLISTIC COMPETITION This describes a market structure in which there are many firms selling products that are similar but not identical. Example: Markets for novels, movies, CDs and computer games.