Cost:
Production involves cost. The cost of production is defined as the aggregate of the expenditure incurred by the producer in the process of production. Cost is also valuation placed on the use of resources.
There are several concepts of costs and these are discussed in the chapter on Cost Analysis.
Price:
The value of anything expressed in terms of money is the ‘Price’ of that thing. There are two concepts of price namely; Market Price and Normal Price. Market price is the price, which actually prevails in the market at a given time. Normal price is the one that is normally expected to prevail in the long run.
The demand side determines the market price as in the short time supply is assumed to be almost inelastic.
In the long run supply is capable of adjusting itself, and hence Normal price is more influenced by supply side.
Competition:
In absence of monopoly a degree of competition is always there in the markets. It can be either perfect or imperfect. The latter has several forms such as monopoly, duopoly, oligopoly or monopolistic competition.
Monopoly:
Monopoly is that market category in which there is a single seller. Features of monopoly are
1. Existence of a single firm.
2. Firm is itself an Industry.
3. Absence of a close substitute.
4. Barriers to entry of a new firm.
5. A monopolist can fix either the price or output, but not both.
Production involves cost. The cost of production is defined as the aggregate of the expenditure incurred by the producer in the process of production. Cost is also valuation placed on the use of resources.
There are several concepts of costs and these are discussed in the chapter on Cost Analysis.
Price:
The value of anything expressed in terms of money is the ‘Price’ of that thing. There are two concepts of price namely; Market Price and Normal Price. Market price is the price, which actually prevails in the market at a given time. Normal price is the one that is normally expected to prevail in the long run.
The demand side determines the market price as in the short time supply is assumed to be almost inelastic.
In the long run supply is capable of adjusting itself, and hence Normal price is more influenced by supply side.
Competition:
In absence of monopoly a degree of competition is always there in the markets. It can be either perfect or imperfect. The latter has several forms such as monopoly, duopoly, oligopoly or monopolistic competition.
Monopoly:
Monopoly is that market category in which there is a single seller. Features of monopoly are
1. Existence of a single firm.
2. Firm is itself an Industry.
3. Absence of a close substitute.
4. Barriers to entry of a new firm.
5. A monopolist can fix either the price or output, but not both.
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