What is meant by market? Distinguish between perfect and imperfect market


In ordinary language, a market means a place where things are bought and sold. But in Economics a different meaning has been given to the term. Professor Chapman says “Economically interpreted the term ‘market’ refers not to a place but to a commodity or commodities and buyers and sellers of the same who are in direct competition with one another.” Thus we speak of cotton market, share market etc. There is a market for every commodity that has buyers and sellers, even though there is no specified place where they meet. All that is required to constitute a market therefore is a commodity that can be bought and sold some are willing to buy and others are willing to sell. 

The buyers and the sellers can communicate with one another by words of mouth, by letter, telephone, cable, internet or by wireless, the method or place does not matter. The definition of the market points out two main features of an economic market. Firstly there must be a free competition among buyers and sellers. Secondly, as a result of this competition there must be competitive price. The more organized a market is, the greater is the tendency to the same price for the same thing at the same time through out the market, even if it is worldwide.

Perfect and Imperfect Market
On the basis of competition between the sellers and buyers of a commodity, market may be classified into two categories, namely Perfect Market and Imperfect Market.

Perfect market implies the following conditions:
(a)        A large number of sellers and buyers
(b)        Buyers know the prices charged by the different sellers of the commodity
(c)        Only one price prevails in the market due to the competition between buyers and sellers.

But these conditions rarely exist in reality. The number of sellers or of buyers may be small and as a result the competition between them may not be free or perfect. When there are a small number of sellers, they can influence the price by selling more or less of the commodity. The buyers may also be smaller in number and they can also influence the purchase price by purchasing more or less of the thing. Different sellers may sell at different prices because each seller controls a large part of the total supply. The same is the true of the big purchasers. The buyers may be ignorant of the prices charged by the sellers or buyers may have preference for particular sellers. As a result the sellers can sell at different price than others. These conditions make market imperfect.

Comments

Post a Comment

Popular posts from this blog

Compare the anatomy of Bifacial and Isobilateral leaves

BIFACIAL LEAF: It is also called dorsiventral leaf. This leaf is more strongly illuminated on upper surface than on lower surface. This unequal illumination induces a difference in the internal structure between upper and lower sides. Its internal structure shows: (1)        Upper Epidermis This is single layer of cells with thick cuticle which checks excessive evaporation of water from the surface. It does not contains chloroplasts, stomata are also absent. (2)        Lower Epidermis This is also single layer but with a thin cuticle. It bears many stomata, two guard cells of which contain some chloroplast, none are present in the epidermal cells. Internal to each stomata is large cavity called respiratory cavity. Lower epidermis of leaf is meant for exchange of gases (oxygen and carbon dioxide) between the atmosphere and the plant body. Excess water also evaporates from lower epidermis. (3)...
Read more

osmoregulation in terrestrial and aquatic animals

Mechanism of osmoregulation is very important for all groups of animals whether inhibting land or water. Unlike plant cells, animal cells when placed in hypotonic solution burst due to the continuous absorption of water. On the contrary they would shrink and die if constantly placed in hypertonic solution. Normally uptake and loss of water are in balance for proper survival of cell. (1)        Osmoregulation in terrestrial animals: Terrestrial animals are more likely to loose water by evaporation through their permeable surfaces exposed to amsophere. Among various animal groups only Arthropods and vertebrates became the most successful land dwellers. They have developed number of strategies to maintain osmoregulation of their body fluid. (a) Water proof external coverings: To prevent water loss through external surfaces, vertebrates like reptiles, birds and mammals have water proof keratinized epidermis. Similarly the insects have developed...
Read more

Autobiographical elements in A Farewell to Arms

Introduction Some, literature can be satisfactorily read and discussed taking the author into account. Other literature seems inseparable from the person who created it. To an extraordinary degree Hemingway and what he has written exist in a synergetic relationship, reinforcing and fulfilling each other; he has created a personal legend which serves as an ambience in which we read him. Autobiographical Touches The novel A Farewell to Arms autobiographical elements. The love-affair between Fredric and Barkley, the hero’s injury in the battlefield, his despair and frustration, the hero’s separate peace with life are some of the characteristics of Hemingway’s life. Hemingway himself had received the injury caused by the mortar-shell at Fossalta, and he was admitted into the Milan hospital for recuperation in the late summer and autumn of 1918. He fell in love with the nurse in the Milan hospital. Carlos Baker has thrown light on this fact. In A Farewell to Arms Hemingway was d...
Read more