Distinguish between monopoly and perfect competition.
Distinguish between monopoly and perfect competition.
Monopoly differs from perfect competition in the following ways :
(i) In monopoly, there is a single seller (or firms) of a product whereas under perfect competition there arelarge number of sellers (or firms).
(ii) A monopolist produces or sells a product which has no close substitute. On the other hand, under perfect competition, the products sold by the various firms are homogenous or identical. They are perfect substitutes of each other.
(iii) In case of monopoly, there is no freedom of entry of new firms in the industry whereas under perfect competition, there is free entry and exit of firms in the industry.
(iv) For a monopolist firm, the demand curve of its product slopes downward to the right. On the other hand, a perfectly competitive firm faces a perfectly elastic downward curve (i.e., horizontal straight line).
Monopoly differs from perfect competition in the following ways :
(i) In monopoly, there is a single seller (or firms) of a product whereas under perfect competition there arelarge number of sellers (or firms).
(ii) A monopolist produces or sells a product which has no close substitute. On the other hand, under perfect competition, the products sold by the various firms are homogenous or identical. They are perfect substitutes of each other.
(iii) In case of monopoly, there is no freedom of entry of new firms in the industry whereas under perfect competition, there is free entry and exit of firms in the industry.
(iv) For a monopolist firm, the demand curve of its product slopes downward to the right. On the other hand, a perfectly competitive firm faces a perfectly elastic downward curve (i.e., horizontal straight line).
