(i) When products or services are sold and bought in the place of their production, it is known as local market.
(ii) In such markets, the products exchanged are mostly perishable and semi-durable in nature.
Example: Vegetables, fruits, etc.

A single organization which employs factors of production to produce goods and sells.

The concept of imperfect competition was propounded in 1933 in England by Mrs. Joan Robinson (1903 - 1983) and in America by E.H. Chamberlin (1899 - 1967).

(i) Oligopoly is a market situation in which there are few firms selling homogeneous or differentiated products.
(ii) Competition among only a few firms in the market.

(i) Monopoly has been derived from two words 'Mono' - single, 'poly' - to control.
(ii) Monopoly is a market situation in which there is only one seller.
(iii) There is no scope for competition.

Excess capacity is the difference between the optimum output that can be produced and the actual output produced by the firm.

Personal - Different prices are charged for different individuals. (eg) railway
Geographical - Different prices are charged at different places for the same product.

(i) Pure competition is a narrower term for perfect competition.
(ii) Its features are presence of large number of buyers & sellers; homogeneous products and free entry and exit of the firms.

Market refers to a system of exchange between the buyers and the sellers of a commodity.

(i) It is a market structure in which there is only one buyer of a good or service.
(ii) If there is only one customer for a certain good that customer has 'Monopsony' power in the market for that good.
(iii) Monopsony is analogous to monopoly. But monopoly has market power on the demand side rather than the supply side.

Firm : A single production unit in an industry, producing a large or a small amount of the commodity. (eg) Hamam, Lux are 2 firms.
Industry : A group of firms producing the same product. (eg) soap industry.

(i) Expenditure involved in selling the product is called selling cost.
(ii) It is the cost incurred to alter the position of the demand curve for a product. (eg) advertisement.
(iii) Sales promotion by advertisement is called non-price competition.

First degree price discrimination:
(i) A monopolist charges the maximum price that a buyer is willing to pay.
(ii) This is perfect price discrimination.
(iii) Consumer's surplus is zero.
Second degree price discrimination:
(i) Price charged is such that a part of consumer's surplus is taken away by the sellers.
(ii) This is called imperfect discriminating monopoly.
(iii) Buyers are divided into groups and a different price is charged for each group. (eg) cinema theaters charge different price for the same film for different class.
Third degree price discrimination
(i) The entire market is split into a few sub markets and different prices are charged in each sub market.
(ii) The division is done based on age, sex, location. (eg) senior citizens pay lower fares in railways.

(i) Buyers and sellers of a commodity or a service. A commodity is bought and sold.
(ii) Price agreeable to buyer and seller.
(iii) Direct exchange and indirect exchange.

Introduction:
E.H. Chamberlin introduced the concept of monopolistic competition.
(i) Firm under monopolistic competition has equilibrium when MC = MR & when MC cuts MR from below.
(ii) The AR curve slopes downward and is fairly elastic.
(iii) Different firms produce different varieties of the product and sell them at different prices.
Each firm seeks to get equilibrium with regard to
1) price & output 2) product adjustment 3) selling cost adjustment
Short run equilibrium

In fig (a) OM is the equilibrium output. OP is the price.
TR = OMQP, TC = OMRS, Abnormal Profit = PQRS
In fig (b) TR = OMQP, TC = OMLR, Loss = PQLR
Long run equilibrium:

(i) In short run the firm may earn super normal profit or incur loss.
(ii) In the long run the AR is more elastic.
(iii) The firms earn only normal profit.
(iv) Equilibrium output = OM. Price = OP, AR = QM, AC = QM.
(v) Equilibrium is got when AR = AC. AR is tangent to AC at Q.

Introduction:
Few firms selling homogeneous or differentiated product is oligopoly. (eg) car, cigarette.
(i) Few large firms: Very few big firms own the major control of the whole market by producing major portion of the market demand.
(ii) Interdependence among firms: The price & quality decisions of a particular firm are dependent on the price & quality decisions of the rival firms.
(iii) Group behaviour: The firms realise the importance of mutual co-operation.
(iv) Advertisement cost: The oligopolist raises sales by advertising or improving the quality of the product.
(v) Nature of Product: Products may be differentiated or homogeneous.
(vi) Price rigidity: Prices are difficult to be changed. The oligopolistic firms do not change their prices due to the fear of rival's reaction.

Large number of buyers and sellers:
(i) Since there are large number of buyers and sellers each individual buyer or seller buys or sells a very very small quantity of the product found in the market.
(ii) So he has no power to fix the price of the product.
(iii) He is only a price taker.
Homogenous product & uniform price:
(i) All the units of the product are perfectly substitutable - they are of the same size, shape, colour, quality.
(ii) So a uniform price prevails in the market.
Free entry and exit:
(i) In the short run, the very efficient producer can produce the product at a very low cost & earn super normal profit.
(ii) This attracts new firms to enter.
(iii) When there are more firms, supply increases, so price falls.
(iv) Inefficient producer faces loss & so quits the market.
Absence of transport cost:
The prevalence of the uniform price is also due to the absence of the transport cost.
Perfect knowledge of the market:
(i) All buyers and sellers have a thorough knowledge of the quality of the product, prevailing price.
No government intervention:
(i) No government regulation on supply of raw materials & in price determination.