This document defines and explains the characteristics of a perfect competition market. Key points include: - A perfect competition market is one where many small producers sell identical products, meaning buyers have many alternatives and no single seller can influence the market price. - Main features include homogeneous products, many buyers and sellers, perfect information and mobility of factors of production. Agricultural markets are often used as examples. - In the short run, firms aim to maximize profits by producing where marginal revenue equals marginal cost. In the long run, firms will exit if earning losses or normal profits and entry will occur if profits are above normal. - The market equilibrium price is determined by the intersection of total industry demand and supply. Individual

1. Perfect Competition Market Welcome

3. Buyers and sellers

4. A place or region

6. Meaning of Perfect Competition Market “A Market situation in which a large number of producers or sellers producing and selling homogeneous product.”

7. Meaning of Perfect Competition Market “A Market situation in which a large number of producers or sellers producing and selling homogeneous product.”

8. Main features of Perfect Competition Market

9. Main features of Perfect Competition Market Example: Agricultural products

10. Meaning of Perfect Competition Market Nature of demand and AR, MR Curve of a firm Demand and AR, MR Curve of a firm Price Price=AR=MR Output

11. Meaning of Perfect Competition Market Price determination in the industry Excess supply Supply Curve Price Demand Curve Excess Demand Output

13. Second Condition for maximization of profit > MC curve cut MR curve from bellow

15. Second Condition for maximization of profit is MC curve cut MR curve from bellow

17. Second Condition for maximization of profit is MC curve cut MR curve from bellow Industry Firm ( is a Price Taker) MC Supply Curve MC=MR Price Price E Price=AR=MR O M Demand Curve Output Output E0

18. Meaning of Perfect Competition Market Short run equilibrium of a firm with abnormal profit Firm with Profit MC MC=MR Price AC Price=AR=MR E Profit O M Output

19. Meaning of Perfect Competition Market Short run equilibrium of a firm with No profit No Losses Firm with Profit MC AC MC=MR Price Price=AR=MR E O M Output

20. Meaning of Perfect Competition Market Short run equilibrium of a firm with Losses Firm with Profit AC MC Price Price=AR=MR E Losses MC=MR O M Output

21. Meaning of Perfect Competition Market Long run equilibrium of a firm with Normal Profit Firm with Profit LMC LAC MC=MR Price Price=AR=MR E O M Output

22. Perfect Competition Market Thanks