a) Monopoly and competitive firms operating under similar cost functions arrive at different output decisions. Discuss these differences with graphical illustrations.
Answers
The present lockdown due to COVID 19 has resulted in temporary suspension of
businesses and services provision. The professionals like Doctors, Engineers, Teachers
and Lawyers etc. are no more in a position to continue the provision of their professional
services to earn their livelihood. Keeping the concept of opportunity cost in mind,
identify or assume at least three such professionals from your closest social circle and
work out the opportunity cost they have been bearing to stay at their home.
Explanation:
In business, monopoly and competition are two different modes of business operation. In monopoly, the manufacturer takes more advantage in terms of profit margins and sells on his own terms whereas in competitive market, the seller will always consider its competitors and that is why even if cost functions are same for both of these operations, but the net cost at the consumer would vary a lot. With more competition, end consumer will get a more cost effective and quality product. This is valid for all sort of geographies