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PRICE DETERMINATION IN DIFFERENT MARKETS

CHAPTER 4 PRICEDETERMINATIONIN DIFFERENTMARKETSUnit 3 PRICE -outputDeterminationUnder DifferentMarket Forms The Institute of Chartered Accountants of India170 COMMON PROFICIENCY TESTPRICE DETERMINATION IN DIFFERENT MARKETSL earning ObjectivesAt the end of this unit you will be able to : understand how PRICE and quantity demanded and supplied are determined in perfectcompetition, monopoly, oligopoly and monopolistic competition. understand the conditions required to make PRICE discrimination by monopolist successful. understand how firms in an oligopolist market are this unit, we shall study the DETERMINATION of PRICE and output under perfect competition,monopoly, monopolistic competition and oligopoly. Output is supplied by individual firms onthe basis of market demand and their cost and revenue functions. However, the existence ofdifferent forms of market structure leads to differences in demand and revenue functions ofthe firms.

PRICE DETERMINATION IN DIFFERENT MARKETS Fig. 9 : Equilibrium position of a firm under perfect competition In figure 9, DD and SS are the industry demand and supply curves which equilibrate at E to set the market price as OP. The firms of perfectly competitive industry adopt OP price as given

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