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first we need to find what is monopoly and what is perfect competition.

Monopoly is the market structure that have only one seller, and only sell the unique products. And Monopoly also have very high barriers entry and its impossible to entry.

Otherwise, Perfect competition is the market structure that have many small firms, and only sell the homogeneous products. Perfect competition also have a very low barriers entry, so its very easy to entry.

The comparison:

- Monopoly more inefficient than Perfect competition because the resources are under allocated to the production of its product

- The demand curve for a perfectly competitive firm is perfectly elastic and the demand curve for a monopoly firm is The market demand, which is negatively-sloped according to the law of demand

- The monopoly firm charges a higher price and produces less output than would be achieved with a perfectly competitive market

- While an economic profit is NOT guaranteed for any firm, a monopoly is more likely to receive economic profit than a perfectly competitive firm.

- The positively-sloped marginal cost curve for each perfectly competitive firm is its supply curve.

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โˆ™ 2012-10-27 11:08:15
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Q: Comparison between monopoly and perfect competition?
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