Syllabus T. Y. B. A. Paper : IV advanced economic theory with effect from academic year 2010-11 in idol

Prisoner‟s dilemma Where two or more firms (or 
people), by attempting independently to choose the best 
strategy for whatever the other(s) are likely to do, end up in a 
worse position than if they had co-operated in the first place. 
2.7 QUESTIONS 
 
1. Give one or two other examples (economic or non-economic) 
of the prisoners' dilemma. 
2. Discuss various types of Price leadership. 
3. Define and explain the Theory of Games. 
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3 
 
Module 2 
 
THEORY OF FACTOR PRICING UNDER 
PERFECT COMPETITION 
Unit structure 
3.0 Objectives 
3.1 Introduction 
3.2 Significance of Time Element in price determination 
3.3 Price determination under perfect competition 
3.4 Summary 
3.5 Questions 
3.0 OBJECTIVES 
To study the definition and features of perfect competition. 
To study the significance of Time element in price 
determination by Alfred Marshall. 
To study how price is determine under perfect competition. 
3.1 INTRODUCTION 
Competition means to strive against others for a desired 
object. Competition is needed for survival of market. According to 
Cairncross, perfect competitive market is defined as "one in 
which buyers have no preferences as between the different units 
of the commodity offered for sale, sellers are quite indifferent to 
whom they sell and both buyers and sellers have full knowledge of 
prices in other parts of the market." In other words, perfect 
competition is a market situation where the forces of demand and 
supply operate freely without the influence of any external factors 
and the commodity is sold at a uniform price. It implies complete 
absence of monopoly.