Question

write comparison of markets​

Answer 1

Answer:

(I) Degree of Price Control:

i. Perfect Competition:

A firm under Perfect competition is a Price-taker, i.e. an individual firm has no control over the

price and has to accept the price as determined by the market forces of demand and supply .

ii. Monopoly:

A monopolist is a Price-Maker, i.e., a firm has complete control over the price and fixes its

own price .

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(II) Nature of Demand Curve:

i. Perfect Competition:

The demand curve for a perfectly competitive

firm is perfectly elastic as it has to accept the price fixed by the market forces of demand and supply .

ii. Monopoly:

The monopoly firm faces a downward sloping demand curve as more quantity can be sold only at a lower price .

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(III) Influence on Activities of other Firms:

i. Perfect Competition:

Each firm is so small that its behaviour has no influence on the decisions of other firms operating in the market.

ii. Monopoly:

There is only one firm in the industry. Therefore, the question of reaction from other firms does not arise, i.e. monopolist has full control over the industry.

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