INTRODUCTION TO MICRO ECONOMICS Dr. R. KURINJI MALAR

INTRODUCTION TO MICRO ECONOMICS Dr. R. KURINJI MALAR

• 1.
  PG & RESEARCHDEPARTMENT 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 BAECONOMICS 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 isa 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 Entryand 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 Buyersand 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 Barriersto 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 Mobilityof 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 MarketPower: 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 ofExternalities: 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 inProduct 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.