of Economics Paper Code CHG GE2 KALIYAGANJ COLLEGE 2020 MARKET FOR COMMODITIES Sandeep Sundas Assistant Professor Dept Of Economics Kaliyaganj College Whatsapp No 7063082473 Market for Commodities ID: 1028202
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1. SEMESTER-IIB.COM HONS.Subject: Principles of EconomicsPaper Code: CHG GE-2KALIYAGANJ COLLEGE2020
2. MARKET FOR COMMODITIESSandeep SundasAssistant ProfessorDept. Of EconomicsKaliyaganj College.Whatsapp No- 7063082473
3. Market for CommoditiesRevenue concepts under different market conditions: TR, MR and AR.Relations between AR, MR and Elasticity of demand.Perfect competition- short and long run.Supply curve in the short run (shut down and break even concepts)Monopoly-short and long run.Concept of price discrimination.Monopolistic competition, oligopoly market- short and long run equilibrium.
4. Revenue concepts under different market conditions: TR, MR and AR.Revenue : is defined by R=PQ where P is the price and Q is the quantity sold. Suppose a commodity price is Rs. 5 and the units of the commodity sold is 100 units, therefore Revenue R is 5*100= 500.Average Revenue: AR is defined by the revenue per unit of output. AR= R/Q. AR is the price in the market condition.Marginal Revenue: MR is defined by change in revenue due to change in the quantity sold. MR= dR/dQ.Elasticity of demand : is the responsiveness of the change in the demand due to the change in its price. Elasticity of demand is divided into three they are as followsPrice elasticity of demand: Change in the demand due to the change in the price of the commodity.Income elasticity of demand : change in the demand due to the change in the income.Cross elasticity of demand: is the responsiveness in the quantity demanded of one good when the price for another good changes.
5. Relations between AR, MR and Elasticity of demand
6. Perfect CompetitionThere are large number of buyers and sellers in the market.They produce homogenous product.There is free entry and exit.The buyers and sellers have a perfect knowledge of the market conditions.The labours are mobile.
7. Perfect competition – Short run.In the short run, the firm may earn Super normal profits, normal profits or losses.The condition for equilibrium in the short run areMC= MRMC must cut the MR from below.
8. Short run equilibrium- perfect competition
9. Perfect competition – Long runThe firms earn normal profits in the long run.The equilibrium condition of firm under long run is MC=MRMC is increasing.a. From Loss to Normal Profit: many firm will leave the market, as a result there will be decrease in supply and price goes up. Factor price of production goes down and AC curve goes down and normal profits are observed.b. From super normal profits to normal profitNew firms enter the market, the supply increases and prices will fall. The demand for factors of production goes up and cost curve shifts upward where normal profits are observed.
10. Long run equilibrium- perfect competition.
11. Monopoly marketMonopoly market is a market structure where there is single seller and many buyers.There are barriers to entry.They are known as price makers.They can fix both price and quantity but not both simultaneously.
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13. Monopoly market- short run equilibrium
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15. Monopoly market – long run equilibrium
16. Price DiscriminationDeveloped by AC Pigou.There are three degrees of price discrimination:1st Degree: Monopoly seller of output to know the maximum price the consumers are willing to pay.2nd Degree: Price varies as quantity demanded.3rd Degree: Charging different prices to different consumer groups.
17. Monopolistic competitionThe characteristics of monopolistic competition is as same as perfect competition except the homogeneity character but monopolistic market produces somewhat differentiated product.
18. Oligopoly market structureOligopoly is a market structure where there are few sellers more than one.Few sellersInterdependencePrevalent advertisingBarriers to entryProduct differentiation.Examples are: automobiles, oil and gas, steel industry, airlines etc.
19. Kinked demand curve
20. Price leadershipLow cost firmsDominant firms which produces maximum output in proportion to total output.Barometric price leadership .Exploitative and aggressive price leadership.
21. Thank youPAPER TAUGHT BYSandeep SundasAssistant ProfessorDept. Of EconomicsKaliyaganj College.Whatsapp No- 7063082473