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Exam Paper Table of Contents Introduction 3 Main Body 3 Conclusion 11 References 12 Introduction Perfectly Competitive market is a market where there are many buyers and few sellers. No single seller or buyer can influence the price of the market. Perfectly competitive market deals with the homogenous product…
Explanation will be given how the perfectly competitive firms response due to changes in consumer demand. Another market structure is Monopoly. In monopoly market there is only one seller in the market. The differences between the characteristics of the two markets will be discussed. In this paper, brief explanation will be given for different types of market structure. Main Body Perfect Competition Demand –Supply Equilibrium The equilibrium is a situation where the market demand is equal to the market supply. This means for a particular industry, the market demand will be equal to the market supply. Suppose the Pizza industry is providing the same supply of Pizza as compared to the demand for the product. In case of market equilibrium, there is no pressure for price change because both the consumers and producers are satisfied in this situation. There is neither excess supply in the market nor excess demand in the market (Machovec, 2002, p.19). In the above diagram, the equilibrium has been shown by the interaction between demand and supply curve. P is the market price and Q is the quantity demanded. Market will produce OQ amount of output and the consumers will demand the same amount of output. So the price will remain same. Due to changes in any of the factors, the entire equilibrium position will get affected. It would result in either excess demand or excess supply. ...
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