Subject: Economics
Class 11
English Taxonomy:
Tamil Taxonomy:
English title: Features of the Perfect Combination:
Tamil title:
Chapter Name English: MARKET STRUCTURE AND PRICING
Chapter Name Tamil:
s.no English Script English Text on Tamil Script Tamil text on
screen screen
1 Hi students ,
Today we gonna explore the
topic Features of Perfect
Competition
Imagine walking into a
marketplace or online
shopping where every seller
offers the exact same
product at the exact same
price. Nobody can
overcharge, nobody can
undercut the price . Sounds
fair and dreamy, right?
That’s what economists call
perfect competition. Let’s
find out what makes this
market so… well, perfect!
So, everyone knows what a
market is, right? You all go
to markets to buy things
maybe groceries, clothes, or
even gadgets. But what
exactly is a market?
A market is simply a place,
either real like a shopping
mall or vegetable market or
virtual like online shopping
websites, where buyers and
sellers meet to exchange
goods and services for a
price.
Market comes in different
type and one of them is
perfect competition.
Perfect competition is an
ideal market where there are
many buyers and sellers,
everyone sells identical
products, no one can set the
price, and anyone can freely
enter or leave the market.
Everyone has full
information, so competition
is completely fair and prices
are set only by supply and
demand
2 Perfect
Economist Joan Robinson competition
said: ‘Perfect competition prevails when the
prevails when the demand The demand for
for each producer’s product the output of each
is perfectly elastic.’ producer is
perfectly elastic
Simply put: No single seller
controls the price. The price
is set by the entire market."
3
So we will discuss few 1.Large Number
features of perfect of Buyers and
competition to make the Sellers
concept more clear.
2.Homogeneous
Which are as follows Product and
Uniform Price
1.Large Number of Buyers
and Sellers 3.Free Entry and
Exit
2.Homogeneous Product
and Uniform Price 4.Absence Of
Transport Cost
3.Free Entry and Exit
5.Perfect
4.Absence Of Transport Mobility of
Cost Factors of
Production
5.Perfect Mobility of
Factors of Production 6.Perfect
6.Perfect Knowledge of the Knowledge of the
Market Market
7.No Government 7.No Government
Intervention Intervention
4 Feature 1 – Many Buyers &
Sellers Price-taker.
Imagine you're at a massive
vegetable market. There are
hundreds of buyers and price-maker.
sellers all around. Now, if
you're just one of those
buyers looking to buy a kilo
of tomatoes, do you think
you can walk up and say,
I'll pay only ₹10 per kilo,
take it or leave it"?
Not really! Because you're
just one buyer among many,
and your demand is too
small to influence the price.
So, you simply pay the
market price. You're a price-
taker.
Now think vice versa.
Suppose you’re one of the
many sellers in that same
market. You’ve brought two
box of tomatoes. Can you
charge ₹100 per kilo while
everyone else is selling at
₹20? No chance! Buyers
will just walk to another
stall. So you too, have to
accept the going rate. Again,
you're just a price-taker, not
a price-maker.
That’s what we mean when
we say “a large number of
buyers and sellers.” Each
individual is too small to
influence the market price
they just go along with it.
5 Feature 2 – Homogeneous
Products, homogeneous
One Price product.
Think of buying a packet of same price.
table salt. No matter which
shop you go to, the product
is the same taste, same
quality, same look. That’s
what we call a
homogeneous product.
Since there's no difference
between one seller’s salt and
another’s, everyone charges
the same price.
So in such markets,
products are perfect
substitutes, and a uniform
price naturally prevails.
6 Feature 3 – Free Entry &
Exit
Imagine a vendor in
Madurai selling Jigarthanda
at a very low cost and
making great profits. Other
local sellers notice this and
start setting up their own
Jigarthanda stalls. As more
sellers enter, the supply
increases and prices begin to
drop.
Now, some sellers can’t
match the efficiency or
taste, and they start making
losses. Eventually, they shut
shop and exit the market.
With fewer sellers left,
supply reduces, prices go up
a bit, and the efficient ones
earn better profits again.
That’s how free entry and
exit works in a market new
firms enter when profits are
high, and inefficient ones
leave when they can't keep
up.
7 Feature 4 – No Transport
Costs no transport cost
price stays the
Uniform pricing also same for all.
happens because there’s no
transport cost involved. uniform price
Imagine you're buying filter
coffee powder right next
door or a few streets away
there’s no extra charge for
delivery or travel. Since
everyone gets the product at
the same place without
added costs, the price stays
the same for all.
In such cases, no one pays
more just because they live
farther away that’s why a
uniform price prevails in the
market.
8 Feature 5 – Perfect Mobility
of Factors factors of
production like
labour and capital
Another reason prices stay can move freely.
uniform is because factors
of production like labour free movement
and capital can move freely.
For example, if a skilled price stable and
weaver in Kanchipuram can uniform
easily shift to working in
Erode’s textile units where
demand is higher, or an
investor moves money from
one industry to another, then
resources go where they’re
needed most.
This free movement helps
balance supply and demand,
which keeps the price stable
and uniform across the
market.
9 Feature 6 – Perfect
Knowledge everyone knows
everything
In a perfect market,
everyone knows everything perfect
buyers and sellers both have knowledge
full knowledge of product
quality and current prices.
For example, imagine you're same price.
buying turmeric from a
nearby market.. You already
know the market price and
quality standards because
the information is easily
available. Sellers also know
what customers expect and
what others are charging.
With this perfect
knowledge, no one can
cheat or overcharge so
everyone trades fairly and at
the same price.
10 Feature 7 – No Government
Intervention the government
doesn’t step in
In a perfectly competitive
market, the government no price controls
doesn’t step in there are no
price controls or restrictions demand and
on raw materials. supply,
For instance, imagine small-
scale banana chip makers in
Tamil Nadu buying raw
bananas freely and selling at
market-driven prices. The
government doesn’t fix
prices or limit supply.
Everything is decided by
demand and supply, not by
regulation.
This freedom keeps the
market natural and
competitive.
11
So, what makes perfect
competition “perfect”? It’s
the balance between many
buyers and sellers, identical
products, no restrictions,
and complete freedom for
everyone involved. No one
controls the price; the
market does.
In this perfect scenario,
everyone plays fair, and
prices reflect real demand
and supply. While real-
world markets may not
always be this perfect,
understanding this model
helps us see how
competitive forces shape
pricing, efficiency, and
fairness in the economy.
Thank you and we will meet
again with an interesting
topic in next video.
