Absence of transport cost is not an essential condition of pure competition. If the two conditions of pure competition are fulfilled, there can be no question of monopolistic control. In perfect competition, apart from the absence of monopoly, some other conditions are also essential, e.g., free entry and exit, the absence of transport cost, perfect knowledge.
In market equilibrium, supply is vertical line. The downward sloping demand curve shifts to the right. Then
If demand is inelastic, a change in the price will change total revenue in same direction. When demand is price inelastic, a given percentage change in price results in a smaller percentage change in quantity demanded. That implies that total revenue will move in the direction of the price change: an increase in price will increase total revenue, and a reduction in price will reduce it.
Which one of the following pairs of commodities is an example of substitutes?
Prices of substitutes should not change is the assumption of law of demand. For example if the price of Coke is decreased then it will lead to fall in the demand for Pepsi even when the price of Pepsi has remain constant as Pepsi is close substitute of Coke, in the same way if the price of Coke is increased than it will lead to rise in demand for Pepsi.
What is the shape of the demand curve faced by a firm under perfect competition?
The shape of the demand curve faced by a firm under perfect competition is Horizontal. The demand curve faced by a firm in a perfectly competitive market is infinitely elastic. Graphically, this means that it is a horizontal line at the market price.
Ten rupees is the equilibrium price for good X. If government fixes the price at Rs.5, there is
A rise in supply and demand in equal proportion will result in no change in equilibrium price and increase in equilibrium quantity.
Zubair has a special taste for college canteen's hotdogs. The owner of the canteen doubles the prices of hotdogs. Zubair did not respond to the increase in prices and kept on demanding the same quantity of hotdogs. His demand for hotdogs is
Zubair has a special taste for college canteen's hotdogs. The owner of the canteen doubles the prices of hotdogs. Zubair did not respond to the increase in prices and kept on demanding the same quantity of hotdogs. His demand for hotdogs is perfectly inelastic.