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Implication of Perfect Comp.                                                FEATURES OF PERFECT COMPETITION Introduction Perfect competition is a state of a market. Anything which facilitates contact between buyers and sellers constitutes a market. It may be a face to face meeting at some place or simply verbal negotiations through telephone, internet, etc. Conventionally, in microeconmoics the markets are classified into these states: perfect competiton, monopoly, monopolistic competition and oligopoly. There are many criteria of classification, the number of sellers, similarity of products, availability of information, mobility of firms and the inputs engaged in the firm, etc. Whatever the criteria the end result is reflected in one thing : how much influence an individual seller, on his own, is able to exercise on the market. Lower the influence more the competitive nature of the market it indicates. If the influence of an individual seller is zero, or v

Determination of equilibrium level of Income ,Output and Employment In an economy Equilibrium level of Income, output and Employment is determined where Aggregate Supply in the Economy is equal to aggregate demand. Aggregate supply refers to total production of goods and services in the economy. It is represented by C+S. Aggregate Demand refers to the sum of total expenditure on goods and services in the economy. It is represented by C+I+G+(X-M) in four sector economy. But in two sector economy it is just C+I. C=Autonomous consumption +MPC(Y) Suppose autonomous consumption( consumption at zero level of Income) is 60 and MPC is 0.8 then consumtion at income level of 500 is 460. C= 60+0.8 X500 C curve is straight line (as MPC is constant).  It starts from Y axis due to autonomous consumption.  And it is upward slopping  (Income increases consumption also increases).  Now Investment is autonomous mean it does not depend on level of Income. It is expected that the firms will invest a