Tamilnadu Samacheer Kalvi 11th Economics Notes Chapter 5 Market Structure and Pricing Notes
→ “Marketing is not the art of finding clever ways to dispose of what you make. It is the art of creating genuine customer value”. – Philip Kotler
→ Meaning of market : In the ordinary sense, the word ‘market’ refers to a physical place, where commodities and services are bought and sold.
→ In Economics, the term ‘market’ refers to a system of exchange between the buyers and the sellers of a commodity.
→ On the basis of Time: Alfred Marshall classifies market on the basis of time.
→ Firm and Industry:
A firm refers to a single production unit in an industry, producing a large or a small quantum of a commodity or service, and selling it at a price in the market.
An industry refers to a group of firms producing the same product of service in an economy.
→ Perfect Competition : According to Joan Robinson, “Perfect competition prevails when the demand for the output of each producer is perfectly elastic”.
→ Imperfect Competition: Imperfect competition is a competitive market situation where there are many sellers, but they are selling heterogeneous (dissimilar) goods as opposed to the perfect competitive market scenario.
Meaning: The word monopoly has been derived from the combination of two words, i. e., ‘Mono’ and ‘Poly’. Mono refers to a single and “Poly” to seller.
Definition: Monopoly is a market structure characterized by a single seller, selling the unique product with the restriction for a new firm to enter the market. .
→ Dumping: Dumping refers to practice of the monopolist charging higher price for his product in the local market and lower price in the foreign market
→ Monopolistic Competition: Monopolistic competition refers to a market situation where there are many firms selling a differentiated product.
→ Monopsony: Monopsony is a market structure in which there is only one buyer of a good or service.
→ Bilateral Monopoly: Bilateral monopoly refers to a market situation in which a single producer (monopolist) of a product faces a single buyer (monopsonist) of that product.
→ Oligopoly: Oligopoly is a market situation in which there are a few firms selling homogeneous or differentiated products.
Equilibrium : A situation or a state at which a firm seeks to rest.
Equilibrium Price: The price at which the quantity demanded of a good equals quantity supplied.
Firm: A single organization which employs factors of production to produce goods and sells.
Long run: The period of time during which all factors of production are variable.
Marginal cost: Addition made to total costs already incurred by producing one more unit of the commodity.
Marginal revenue: Addition made to total revenue already incurred by selling one more unit of the commodity.
Monopolist: A single-seller who controls entire or major part of output, which has no close substitutes.
Price-maker: The power in the firm to set the price for goods in the market.
Price-taker: The feature of a firm to accept the price fixed in the industry.