Economics
Published on Nov 18, 2015
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MORE DECKS TO EXPLORE
PRESENTATION OUTLINE
PERFECT MARKET
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The Definition :
A market in which buyers and sellers have complete information about a particular product and it is easy to compare price and product because they are the same as each other
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This is attained when there are:
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Perfect competition:
1. All firms sell identical product
2. All firms are all price taker—
Cannot control market price and products
3. All firms have relatively small market share.
4. Freedom of entry
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DEMAND & SUPPLY CURVE
- Every products are of same price
- No one can influence the market price
- All price taker
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DEMAND AND SUPPLY DIAGRAM
Perfect information:
buyers and sellers know all they need to know about all the things, about all products at all time to make the best decisions.
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All producer make normal profits, meaning that their revenue is equal to their cost.
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Perfect market produces a situation called Pareto efficiency.
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Meaning
Impossible to change the distribution of goods to make one person better off without making anyone worse off.
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Why perfect market meet this condition?
All possible mutually beneficial exchange have been made. Equilibrium is attained.
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THANK YOU
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