CBSE Class 12 Economics full study material and chapter notes. Learning the important concepts is very important for every student to get better marks in examinations. The concepts should be clear which will help in faster learning. The attached concepts made as per NCERT and CBSE pattern will help the student to understand the chapter and score better marks in the examinations.
Six Marks Questions (6 M)
1. Explain the determinants of supply?
2. Explain the relationship between Total Revenue and marginal Revenue using a Schedule and diagram?
UNIT – IV: FORMS OF MARKET AND PRICE DETERMINATION
Market : Market is a place in which buyers and sellers come into contact for the purchase and sale of goods and services.
Market structure: refers to number of firms operating in an industry, nature of competition between them and the nature of product.
Types of market
a) Perfect competition.
c) Monopolistic Competition
a) Perfect competition: refers to a market situation in which there are large number of buyers and sellers. Firms sell homogeneous products at a uniform price.
b) Monopoly market: Monopoly is a market situation dominated by a single seller who has full control over the price.
c) Monopolistic competition: It refers to a market situation in which there are many firms who sell closely related but differentiated products.
d) Oligopoly: is a market structure in which there are few large sellers of a commodity and large number of buyers.
Features of perfect competition:
1. Very large number of buyers and sellers.
2. Homogeneous product.
3. Free entry and exit of firms.
4. Perfect knowledge.
5. Firm is a price taker and industry is price maker.
6. Perfectly elastic demand curve (AR=MR)
7. Perfect mobility of factors of production.
8. Absence of transportation cost.
9. Absence of selling cost.
Features of monopoly:
1. Single seller of a commodity.
2. Absence of close substitute of the product.
3. Difficulty of entry of a new firm.
4. Negatively sloped demand curve(AR>MR)
5. Full control over price.
6. Price discrimination exists
7. Existence of abnormal profit.
Features of monopolistic competition
1. Large number of buyers and sellers but less than perfect competition.
2. Product differentiation.
3. Freedom of entry and exit.
4. Selling cost.
5. Lack of perfect knowledge.
6. High transportation cost.
7. Partial control over price.
Main features of Oligopoly.
1. Few dominant firms who are large in size
2. Mutual interdependence.
3. Barrier to entry.
4. Homogeneous or differentiated product.
5. Price rigidity.
Features of pure competition
1. Large number of buyers and sellers.
2. Homogeneous products.
3. Free entry and exit of firm.
DETERMINATION OF PRICE UNDER PERFECT COMPETITION
Equilibrium: It means a position of rest, there is no tendency to change.
Market equilibrium: It means equality between quantity demanded and quantity supplied of a commodity in the market.
Equilibrium price: This is the price at which market demand of a commodity is exactly equal to the market supply.
Market demand: It refers to the sum total demand for a commodity by all buyers in the market.
Market supply:It refers to supply of a commodity by all the firms in the market
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