Works Project Administration poster Disciplines such as sociologyeconomic historyeconomic geography and marketing developed novel understandings of markets  studying actual existing markets made up of persons interacting in diverse ways in contrast to an abstract and all-encompassing concepts of "the market". The term "the market" is generally used in two ways:
A perfectly competitive market is one in which the number of buyers and sellers is very large, all engaged in buying and selling a homogeneous product without any artificial restrictions and possessing perfect knowledge of market at a time.
In the words of A. The following are the conditions for the existence of perfect competition: The first condition is that the number of buyers and sellers must be so large that none of them individually is in a position to influence the price and output of the industry as a whole.
The demand of individual buyer relative to the total demand is so small that he cannot influence the price of the product by his individual action. Similarly, the supply of an individual seller is so small a fraction of the total output that he cannot influence the price of the product by his action alone.
In other words, the individual seller is unable to influence the price of the product by increasing or decreasing its supply. Rather, he adjusts his supply to the price of the product. Thus no buyer or seller can alter the price by his individual action. He has to accept the price for the product as fixed for the whole industry.
The next condition is that the firms should be free to enter or leave the industry. It implies that whenever the industry is earning excess profits, attracted by these profits some new firms enter the industry.
In case of loss being sustained by the industry, some firms leave it. Each firm produces and sells a homogeneous product so that no buyer has any preference for the product of any individual seller over others.
This is only possible if units of the same product produced by different sellers are perfect substitutes. In other words, the cross elasticity of the products of sellers is infinite.
No seller has an independent price policy. He cannot raise the price of his product. If he does so, his customers would leave him and buy the product from other sellers at the ruling lower price. The above two conditions between themselves make the average revenue curve of the individual seller or firm perfectly elastic, horizontal to the X-axis.
It means that a firm can sell more or less at the ruling market price but cannot influence the price as the product is homogeneous and the number of sellers very large.
The next condition is that there is complete openness in buying and selling of goods. Sellers are free to sell their goods to any buyers and the buyers are free to buy from any sellers.Market structure is best defined as the organisational and other characteristics of a market.
We focus on those characteristics which affect the nature of competition and pricing – but it is important not to place too much emphasis simply on the market share of the existing firms in an industry. Most downloaded Study notes in Market economy.
Developing Project for Ice Breaker. Economics-Auckland University of Technology. vehi33 5 November See this document. Add to favourites. Show others. Latest Study notes uploaded in Market economy. Developing Project for Ice Breaker. Learn economics chapter 7 market structures with free interactive flashcards.
Choose from different sets of economics chapter 7 market structures flashcards on Quizlet. The structure of a market refers to the number of firms in the market, their market shares, and other features which affect the level of competition in the market.
Market structures are distinguished mainly by the level of competition that exists between the firms operating in the market. Different types of market structure 1.
Perfect competition (many firms) 2. Monopoly (one firm), Oligopoly (a few firms) + monopolistic competition, contestable markets and collusion.
This collection of resources brings together study resources on each of the main market structures covered at A level. This collection of resources brings together study resources on each of the main market structures covered at A level.
National & International Economy. SKU: ; Printed Edition. Student personal license.