Nigeria Student Forum

Good morning guys.

I've come to understand that many people have issues with understanding economics which creates a hatred for the subject. Personally, I'll say "economics is very interesting and quite practical".

On this thread, I'll by God's grace, break certain difficult topics in economics.

Note: it's not limited to O'level economics. Thanks.

@Seuncoded, @overcome, @talkthematter, if you have contributions, they'll be accepted.

Modified: the purpose of this thread has just been changed. We'll be talking only about the market; perfect and imperfect.

It so great to have you back, we're all here to contribute and learn

I wonder what comes to the minds of people when they hear "perfect market". Maybe a market that doesn't have any issues and things are going on smoothly. The thing is, some terms in reality mean extremely different things in economics.

Perfect market or perfect competition as it may be called is a market in which individual firms have zero market power. Meaning they cannot influence the price in the market.

What is 'Perfect Competition'
Pure or perfect competition is a theoretical market structure in which the following criteria are met: all firms sell an identical product (the product is a "commodity" or "homogeneous"; all firms are price takers (they cannot influence the market price of their product); market share has no influence on price; buyers have complete or "perfect" information – in the past, present and future – about the product being sold and the prices charged by each firm; resources such as labor are perfectly mobile; and firms can enter or exit the market.

A typical example used by many economics teachers is the Agege bread. The price of Agege bread is influenced by the forces of demand and supply. You, as a buyer cannot say you want to buy the #100 bread for #80 from the seller because it's a fixed price and other sellers sell it for the same price.

Note: in the real world, there's no perfect market. (This is a gist for another time).

Definition: Imperfect competition is a competitive market situation where there are many sellers, but they are selling heterogeneous (dissimilar) goods as opposed to the perfect competitive market scenario. As the name suggests, competitive markets that are imperfect in nature.
Description: Imperfect competition is the real world competition. Today some of the industries and sellers follow it to earn surplus profits. In this market scenario, the seller enjoys the luxury of influencing the price in order to earn more profits.
If a seller is selling a non identical good in the market, then he can raise the prices and earn profits. High profits attract other sellers to enter the market and sellers, who are incurring losses, can very easily exit the market.
There are four types of imperfect markets:
- Monopoly (only one seller) - Oligopoly (few sellers of goods) - Monopolistic competition (many sellers with highly differentiated product) - Monopsony (only one buyer of a product)

Imperfect market is a very broad topic. If you find it difficult to understand anything, kindly let me know. Thanks.