Question

monopoly and competitive firms operating under similar cost functions arrive at different output decisions. discuss the difference with graphical illustrations

Answer 1

Difference Between Monopoly and Competitive Firms :

Features Of Perfect Competitive Firms :

• Large number of buyers and sellers

• Homogeneous or undifferentiated or identical products

• Perfect mobility of goods and factors of production

• Perfect Knowledge of market conditions

• Freedom of entry and exit

• Absence of Transportation costs.

• Uniform Price

• Absence of Govt. control

• Absence of Selling Cost.

Features Of Monopoly Markets :

• Single Seller for a product

• Absence of substitute products

• Entry of new firms are restricted

• The firm is the price maker.

• Monopolist has complete control over supply of the Product.

• Firm and industry are the same because there is only one firm in the monopoly market.

Look the attachments.

1) Demand curve of Perfect Competitive Firms

2) Demand curve of Monopoly Markets

From here , we can clearly knew that the revenue curve of Perfect Competitive is Upward rising Straight line.

And , Demand curve of Monopoly Market will slope negatively.