Question

compare perfect competition and monopoly?​

Answer 1

perfect competition

• large number of sellers and buyers
• free entry and exit of the firm .
• homogeneous product
• perfect substitute goods
• difference between industry and firm
• buyers and sellers have to accept the price which is determined in the industry. They are not the price makers.
• Uniform price prevails for the goods as these are homogeneous.
• price ,AR and MR are the same .This line is parallel to the OX axis. P=AR=MR.

monopoly

• single seller and many buyers
• No scope for the entry and exit
• the product may or may not be homogeneous
• no close substitute goods
• Industry and firm are one and the same
• seller can determine either the price or the quantity of output, but not both.
• price varies depending on demand
• AR,MR curves are different, these curves will have downward slope. P=AR>MR.