PERFECT COMPETITION:
When all companies sell identical items, market share has no impact on pricing, companies can
enter and quit without restriction, customers have perfect or complete information, and
companies cannot set prices, perfect competition exists. It's a market that's completely shaped by
market forces.
CHRACTERISTICS OF PERFECT COMPETITION:
There are a lot of firms in the market.
Every company in the market sells the same thing.
Many producers of the same product.
Firms are price taker.
Buyers have complete information about the goods.
Each company owns a little portion of the overall market (no monopolies).
No barriers to enter or exit.
EXAMPLES:
1. Agriculture: Agriculture can be referred to as perfect competition. All the farmers in the
market produce the same agriculture, e.g., wheat. Many different farmers are growing the
same wheat. They have complete information about their product. There are many
customers of wheat. Because they all use the same recipe and sell them at the same price,
their products have little diversity.
2. Dairy: Second example of perfect competition is dairy industry. All the people in the
dairy industry produce the same milk. All the suppliers of milk supply the same milk and
hence can control the price.
PRICING STRATEGY:
This is defined by the product's market demand and supply curves. The demand curve shows
the entire amount of a product that customers are willing and able to purchase. The supply
curve, on the other hand, shows how much of a product suppliers are ready and able to
supply at a given market price.
, Because the pressure of competing firms pushes them to accept the market's existing
equilibrium price, a perfectly competitive firm is known as a price taker. A company in a
fully competitive market will lose all of its sales if it raises the price of its product by even a
penny. So the prices are kept as low as possible.
MONOPOLY:
A firm that is the sole seller of a product without close substitutes
Has market power
Arise due to barriers to entry
When an entire industry is dominated by a single product of a company, where there is little or
no competition and consumers are bounded to purchase that good or service from that particular
company is called as a monopoly.
Monopoly Pricing Strategy:
Monopoly pricing is a pricing strategy followed by a merchant by which the dealer costs an item
to expand their benefits under the supposition that the individual in question doesn't have to
stress over contest. Specifically, monopoly pricing model estimating is infeasible in contestable
business sectors.
Characteristics of Monopoly:
Following are the characteristics of Monopoly:
Profit maximizer
Price makers
High barriers to entry
Single seller
Price discrimination
Examples:
When all companies sell identical items, market share has no impact on pricing, companies can
enter and quit without restriction, customers have perfect or complete information, and
companies cannot set prices, perfect competition exists. It's a market that's completely shaped by
market forces.
CHRACTERISTICS OF PERFECT COMPETITION:
There are a lot of firms in the market.
Every company in the market sells the same thing.
Many producers of the same product.
Firms are price taker.
Buyers have complete information about the goods.
Each company owns a little portion of the overall market (no monopolies).
No barriers to enter or exit.
EXAMPLES:
1. Agriculture: Agriculture can be referred to as perfect competition. All the farmers in the
market produce the same agriculture, e.g., wheat. Many different farmers are growing the
same wheat. They have complete information about their product. There are many
customers of wheat. Because they all use the same recipe and sell them at the same price,
their products have little diversity.
2. Dairy: Second example of perfect competition is dairy industry. All the people in the
dairy industry produce the same milk. All the suppliers of milk supply the same milk and
hence can control the price.
PRICING STRATEGY:
This is defined by the product's market demand and supply curves. The demand curve shows
the entire amount of a product that customers are willing and able to purchase. The supply
curve, on the other hand, shows how much of a product suppliers are ready and able to
supply at a given market price.
, Because the pressure of competing firms pushes them to accept the market's existing
equilibrium price, a perfectly competitive firm is known as a price taker. A company in a
fully competitive market will lose all of its sales if it raises the price of its product by even a
penny. So the prices are kept as low as possible.
MONOPOLY:
A firm that is the sole seller of a product without close substitutes
Has market power
Arise due to barriers to entry
When an entire industry is dominated by a single product of a company, where there is little or
no competition and consumers are bounded to purchase that good or service from that particular
company is called as a monopoly.
Monopoly Pricing Strategy:
Monopoly pricing is a pricing strategy followed by a merchant by which the dealer costs an item
to expand their benefits under the supposition that the individual in question doesn't have to
stress over contest. Specifically, monopoly pricing model estimating is infeasible in contestable
business sectors.
Characteristics of Monopoly:
Following are the characteristics of Monopoly:
Profit maximizer
Price makers
High barriers to entry
Single seller
Price discrimination
Examples:
