Understanding Markets: Perfect Competition

Name: Understanding Markets: Perfect Competition
Rating: 4.6 (6 reviews)

A guide to understand Perfect Competition

Created byAbdullahil Mamun

Last updated 4/2017

English

What you'll learn

Define market in terms of its features
Learn about market structure and its different forms
Understand basic concepts of revenue and costs
Explain basic postulates of perfect competition
Explain equilibrium of a perfectly competitive (PC) firm both in the short-run and long-run
Interpret the Production decision of PC firm in the short-run
Illustrate when a firm produces facing loss

Course content

4 sections • 20 lectures • 1h 36m total length

Introduction2:31
Organization of the course
Market & Market Structure4:23
Definition of Market with its essential features
Definition of market structure and its diƃerent forms
Concepts of Revenue3:12
- Definition of TR, AR and MR
- How can we have AR from TR?
- How can we have MR from TR?
Concepts of Costs5:12
- Define Total Cost, Total Fixed Cost & Total Variable Cost
- Also show how we can have TC summing up TFC and TVC
Concepts of Average Costs5:14
- Define Average Cost, Average Fixed Cost and Average Variable Cost
- Also show the relative shape, position and relationship among them

Basic Postulates of Perfect Competition2:11
Explain how the assumptions of large number of buyers and sellers and homogeneous product lead the firm to face a perfectly elastic demand curve. Students will get the answer of two important question-
1. Why is a PC firm said to be price taker?
2. Why is the demand curve faced by firm under PC is horizontal/ perfectly elastic?
Why is a PC firm said to be price taker?2:48
Offers a detail explanation of the rest of the assumptions
Assumptions in detail3:20
Why do AR and MR curve become the price line in PC?7:05
Derive AR and MR from TR and show that it is nothing but the price (P) for PC
Short-run equilibrium of PC Firm: TR-TC Method6:33
It uses total revenue and total cost method to explain the short-run equilibrium of PC firm.
Short-run equilibrium of PC Firm: MR-MC Method8:11

Does equilibrium guarantee excess profit to firm in the short run3:01
Introduces three possible situations that a PC firm can face in the short-run at equilibrium-

1. Super normal profit situation

2. Normal profit or break-even situation

3. The situation of loss
Super Normal Profit in the Short-run5:12
Explains the case of super normal profit when the firm is in equilibrium in the short-run
Normal Profit or Break Even Production Decision6:21
Explains when firm reaches to break even situation and earns only normal profit
When does a firm face loss in the short run under PC?4:24
Explains the situation of loss of a PC firm at equilibrium in the short run

Production Decision Facing Loss- by Table6:51
Explains all the possible situations that a PC firm confronts when there is loss at equilibrium using a simple table.
When should firm produce when there is loss at equilibrium?9:04
Explains when a firm produces facing loss.
Shut-down Situation3:27
It explains the shut-down situation of a PC firm facing loss in the short-run
When should the Firm stop its production3:22
Explains the situation when a firm stops its operation when there is loss in the short-run.
Long-run Equilibrium of PC Firm3:44
Illustrates the long-run equilibrium of PC firm

Requirements

No specific prerequisites are necessary
All concepts are introduced slowly and gradually, but comfort with thinking analytically will be helpful

Description

The course contains four sections.

Section A defines market introducing its essential features. It also defines market structure and its different forms. The basic concepts of revenue and costs that are necessary to understand the operation of firms in different market structures are discussed in detail.

Section B works with basic postulates of Perfect Competition (PC) . The price taking role of firm under PC that makes it unique from firms in other market structure is discussed in detail. The concepts of total revenue (TR), average revenue (AR) and marginal revenue (MR) under PC is explained.

Section C focuses on the short-run equilibrium of PC firm. In this section, learners will also be able to know the production decision of a PC firm in the short-run. Firm's super normal profit situation, normal profit or break even situation, and the situation of loss will be examined with necessary illustrations.

Whether firm produces in the short-run facing loss or not is an important issue. Section D provides a detail when a firm under PC produces in the short-run and when it stops operation facing loss. It ends with the examination of lung run equilibrium of PC firm.

The course consists of 20 lectures and a total of 1 hour 40 minutes. It combines both mathematical and graphical contents where possible, so that one can learn alternative ways of interpreting the concepts.

The course is designed considering the desire of students of economics and business. But the contents are arranged in such a way that learners from other disciplines can easily go through the course.

Who this course is for:

The course is designed considering the desire of the students of economics and business
It will be easy going for the learners of other disciplines having analytical thinking attitude

Understanding Markets: Perfect Competition

What you'll learn

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Course content

Market & Market Structure, Concepts of Revenue & Costs5 lectures • 21min

Perfect Competition: Its Basic Postulates6 lectures • 30min

Short-run Equilibrium & Production Decision of PC Firm4 lectures • 19min

Production Decision Facing Loss5 lectures • 26min

Requirements

Description

Who this course is for: