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INTRODUCTION TO MICRO ECONOMICS Dr. R. KURINJI MALAR

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Introduction to Micro Economics

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PG & RESEARCH DEPARTMENT OF ECONOMICS SACRED HEART COLLEGE (AUTONOMOUS) TIRUPATTUR - 635 601 BY Dr. R. KURINJI MALAR ASSISTANT PROFESSOR PG & RESEARCH DEPARTMENT OF ECONOMICS SACRED HEART COLLEGE (AUTONOMOUS) TIRUPATTUR 635 601
MICRO ECONOMICS-II SYLLABUS II BA ECONOMICS UNIT I PERFECT COMPETITION Features- equilibrium of firm and industry - Perfect vs Pure Competition - Pricing under Perfect Competition under Short run and Long run - Importance of time element in price theory.
Meaning Perfect competition is a market structure where a large number of firms produce identical products, and there is freedom of entry and exit for new firms.
Features 1. Homogeneous Products: All firms sell identical products, meaning consumers perceive no difference between products from different producers.
2. Free Entry and Exit: New firms can enter the market easily if profits are being made, and firms can exit if they are experiencing losses.
3. Many Buyers and Sellers: There are numerous buyers and sellers in the market, none of whom have market power to influence the price.
4. Perfect Information: Buyers and sellers have complete information about prices, products, and market conditions, enabling rational decision-making.
5. Low Barriers to Entry and Exit: There are minimal barriers preventing new firms from entering the market or existing firms from leaving. This ensures that profits are driven towards normal levels in the long run.
6. Perfect Mobility of Factors of Production: Factors of production (such as labor and capital) can move freely between different industries or uses, ensuring efficient allocation of resources.
7. No Market Power: Individual firms have no control over the market price and are price takers, meaning they accept the market-determined price for their product.
8. Absence of Externalities: There are no external costs or benefits imposed on third parties outside the transaction between buyers and sellers. This helps in achieving allocative efficiency.
9. Uniformity in Product Quality: Products offered by different firms are of uniform quality and specifications, ensuring that consumers can make purchasing decisions solely based on price.
10. Profit Maximization: Firms aim to maximize profits in the short run by producing where marginal cost equals marginal revenue, and in the long run where marginal cost equals price.

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INTRODUCTION TO MICRO ECONOMICS Dr. R. KURINJI MALAR

  • 1. PG & RESEARCH DEPARTMENT OF ECONOMICS SACRED HEART COLLEGE (AUTONOMOUS) TIRUPATTUR - 635 601 BY Dr. R. KURINJI MALAR ASSISTANT PROFESSOR PG & RESEARCH DEPARTMENT OF ECONOMICS SACRED HEART COLLEGE (AUTONOMOUS) TIRUPATTUR 635 601
  • 2. MICRO ECONOMICS-II SYLLABUS II BA ECONOMICS UNIT I PERFECT COMPETITION Features- equilibrium of firm and industry - Perfect vs Pure Competition - Pricing under Perfect Competition under Short run and Long run - Importance of time element in price theory.
  • 3. Meaning Perfect competition is a market structure where a large number of firms produce identical products, and there is freedom of entry and exit for new firms.
  • 4. Features 1. Homogeneous Products: All firms sell identical products, meaning consumers perceive no difference between products from different producers.
  • 5. 2. Free Entry and Exit: New firms can enter the market easily if profits are being made, and firms can exit if they are experiencing losses.
  • 6. 3. Many Buyers and Sellers: There are numerous buyers and sellers in the market, none of whom have market power to influence the price.
  • 7. 4. Perfect Information: Buyers and sellers have complete information about prices, products, and market conditions, enabling rational decision-making.
  • 8. 5. Low Barriers to Entry and Exit: There are minimal barriers preventing new firms from entering the market or existing firms from leaving. This ensures that profits are driven towards normal levels in the long run.
  • 9. 6. Perfect Mobility of Factors of Production: Factors of production (such as labor and capital) can move freely between different industries or uses, ensuring efficient allocation of resources.
  • 10. 7. No Market Power: Individual firms have no control over the market price and are price takers, meaning they accept the market-determined price for their product.
  • 11. 8. Absence of Externalities: There are no external costs or benefits imposed on third parties outside the transaction between buyers and sellers. This helps in achieving allocative efficiency.
  • 12. 9. Uniformity in Product Quality: Products offered by different firms are of uniform quality and specifications, ensuring that consumers can make purchasing decisions solely based on price.
  • 13. 10. Profit Maximization: Firms aim to maximize profits in the short run by producing where marginal cost equals marginal revenue, and in the long run where marginal cost equals price.