Market is a situation in which buyers and sellers come into contact for the purchase and sale of goods and services.
Market structure: refers to number of firms operating in an industry, nature of competition between them and the nature of product.
Types of market
Features of perfect competition:
Features of monopoly:
Features of monopolistic competition
Main features of Oligopoly
Features of pure competition
Price Ceiling: Means maximum price of a commodity fixed by the government that the sellers can charge from the buyers. It is imposed on necessary commodities like wheat, rice, kerosene, oil, sugar etc. Price ceiling results in excess demand and less supply in the market. It is below the equilibrium price.The shortage of commodity in the market results in following implications
Price Floor (minimum support Price): it is fixed by the government necessarily above the equilibrium price. Sometimes when government feels that the price for a particular good or service should not fall below certain level and sets a floor or a minimum price for these goods and services
Example: Imposition of support price on agricultural commodities in case of requirement the government fixes the support price above the equilibrium price. Price floor results in excess supply and less demand. Application of Demand & Supply Analysis on FAD Theory. Food Availability decline theory is illustrated in terms of the demand Supply Analysis. A drastic fall in the total availability of food causes massive starvation and famine. The casual link is that a large scale cline in food supply pushes the market price up to such a level that many poor people can no longer afford to buy the minimum amount for survival.
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1. What is perfect competition in a market? |
2. How is price determined in a perfectly competitive market? |
3. What are the characteristics of a perfectly competitive market? |
4. What is the role of market equilibrium in a perfectly competitive market? |
5. What are the advantages of a perfectly competitive market? |
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