LOGO COMPARE THE FEATURES OF PERFECT COMPETITION AND MONOPOLY MARKET STRUCTURES Group : 01 05.03.2014 Economics Group Presentation HND: Qs 03 BCAS- Jaffna 1
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COMPARE THE FEATURES OF PERFECT COMPETITION AND MONOPOLY MARKET STRUCTURESGroup : 0105.03.2014EconomicsGroup PresentationHND: Qs 03BCAS- Jaffna
1LOGOGROUP MEMBERSKADOTGAJANBAKEERATHANSUMANVINOJSAKEESAN2CONTENTSIntroduction.Perfect Competition Market.Monopoly Market.Compare And Contrast.Conclusion.31.INTRODUCTION4IntroductionDefinition of Perfect competition market.Definition of Monopoly market.Characteristics of Perfect Competition market. Large member of buyers and sellers.Free entry and exit.Both buyers and sellers are price takers.Can earn ordinary profit in long term. 5Introduction cont.Characteristics of Monopoly market.Single sellerNo close substitutesBarriers to entryCan earn Abnormal Profits Compare and Contrast.Conclusion.
62. Perfect Competition Market7
Perfect Competition MarketPerfect competition is the market in which there are large number of buyers and sellers.8
Characteristics of Perfect Competition Market9Profit-Maximizing Level of OutputThe goal of the firm is to maximize profits.Profit is the difference between total revenue and total cost.A firms Equilibrium point is MC=MR
10Profit-Maximizing
11ShutdownA short-run decision not to produce anything because of market conditionsIf shutdown in short-run, must still pay fixed cost
ExitA long-run decision to leave the marketIf exit in long-run, zero costs
Sunk costA cost that has already been committed and cannot be recovered
12Zero-Profit conditionThe process of entry or exit is complete remaining firms earn zero economic profitZero economic profit occurs when P=ATC
13
3. Monopoly Market14
What is Monopoly? Monopoly is a market situation where there is only a single seller with complete control over an industry.The main cause of monopolies is barriers to entry- other firms cannot enter the market Factors of Monopoly1. Resource2. Government3. Natural factors
15Characteristics of Monopoly Market16Monopoly
17Deadweight loss due to Monopoly
18Monopoly's Revenue QuantityPrice Total Revenue Average RevenueMarginal Revenue0110------------11010101029189838248647287456306265305074284-283243-4Summary19
4. Comparison Between Perfect Competition & Monopoly
20
ComparisonSimilaritiesComparisonDifferences21SimilaritiesTowards Maximum ProfitEquilibrium Condition: MC = MR .
22Perfect Competition MarketMonopoly Market
Similarities cont.3. Determination of Price .
23Perfect Competition MarketMonopoly MarketSimilarities cont.4. Cost Curves .
24Perfect Competition MarketMonopoly MarketSimilarities cont.5. Can earn economic profits in the short run.
25Perfect Competition MarketMonopoly Market
DifferencesPerfect CompetitionMonopolyLarge numbers of firms and buyersSingle firm with less buyersA single firm cant effect the price A single firm can effect the price Producer is Price Taker .Price maker .Consumers Sovereignty (Power) existsProducers Sovereignty No barriers to enter the marketBarriers to enter the market
26Perfect Competition MarketMonopoly MarketDifferences cont.Perfect CompetitionMonopolyPrice Discrimination is not possiblePrice Discrimination is possible
Equilibrium Pricing Condition .
27Perfect Competition MarketMonopoly Market
Differences cont.Perfect CompetitionMonopolyClose Substitution exists No SubstitutionsMR=AR=P=DPrice > MC.Demand curves Shape (Ed ) .Demand curves Shape (Ed < , >, = 1).
28Perfect Competition MarketMonopoly MarketDifferences cont.Perfect CompetitionMonopolyProfit in Short Run Normal, Abnormal, LossAbnormal profit.Profit in Long Run NormalSuper Abnormal profit.
29Differences cont.Perfect Competition : Normal, Abnormal, Loss in SR and Normal Profit in LR
30Differences cont.Monopoly : Abnormal profit & Super Abnormal Profit. in SR and LR
315.Conclusion32ConclusionSeveral Real world examplesPerfect Competition: Agricultural marketsFish market and vegetable or fruit vendorsFree software vendorsStreet food vendorsMonopolyCeylon Petroleum CooperationSri Lankan RailwaysDrugs for Aids patients
33
Perfect Competition & Monopolyin Contemporary scenarioBoth markets doesn't existBecause;Governments influencesPrivatization/ GlobalizationSales Promoting Strategies i.e. AdsSo we can conclude that the Perfect Competition & Monopoly markets are conceptual markets in the Contemporary scenario.
34Questions?35Thank You !36LOGO
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