Wheat market comes closest to perfect market. A perfectly competitive firm is called a price taker, because the pressure of competing firms forces them to accept the prevailing equilibrium price in the market. When a wheat grower wants to know what the going price of wheat is, he or she has to go to the computer or listen to the radio to check.
Mr. Raees Ahamd bought 50 litres of petrol when his monthly income was Rs.25000. Now his monthly income has risen to Rs.50,000 and he purchases 100 litres of petrol. His income elasticity of demand for petrol is
Mr. Raees Ahamd bought 50 litres of petrol when his monthly income was Rs.25000. Now his monthly income has risen to Rs.50,000 and he purchases 100 litres of petrol. His income elasticity of demand for petrol is 1.
Total utility is maximum when Marginal utility is zero. It is based in the law of diminishing marginal utility which says 'as more and more units of a good are consumed, MU i.e level of satisfaction derived from each successive unit goes on falling because desire for that commodity tend to fall.
Under which of the following forms of market structure does a firm have no control over the price of its product?
Under Perfect competition forms of market structure does a firm have no control over the price of its product. All goods in a perfectly competitive market are considered perfect substitutes, and the demand curve is perfectly elastic for each of the small, individual firms that participate in the market. These firms are price takers–if one firm tries to raise its price, there would be no demand for that firm's product
No close substitute is a condition for existence of monopoly. If a close substitute exists, then the monopoly cannot exist. Remember, a monopoly can only exist when the cross-elasticity of the product that the monopolist produces is zero.
When price elasticity of demand for normal goods is calculated, the value is always
When price elasticity of demand for normal goods is calculated, the value is always Negative. The PED is the percentage change in quantity demanded in response to a one percent change in price. The PED coefficient is usually negative, although economists often ignore the sign. Demand for a good is relatively inelastic if the PED coefficient is less than one (in absolute value).
If the demand for a commodity is inelastic, an increase in its pice will cause the total expenditure of the consumers of the commodity to
If the demand for a commodity is inelastic, an increase in its pice will cause the total expenditure of the consumers of the commodity to Increase. When demand is inelastic, a fall in the price of a commodity leads to fall in total expenditure on it. On the other hand, when price increases, total expenditure also increases.
Which one of the following is the condition of equilibrium for the monopolist?
MR=MC is the condition of equilibrium for the monopolist. The conditions for Equilibrium in Monopoly are the same as those under perfect competition. The marginal cost (MC) is equal to the marginal revenue (MR).
In case of monopoly, Marginal revenue is always less than average revenue. A monopolist's marginal revenue is always less than or equal to the price of the good. Marginal revenue is the amount of revenue the firm receives for each additional unit of output.
Income elasticity of demand for normal goods is always