Concept Application Discuss the alternative theories to profit maximisation ranging from perfect competition to strict monopolies

Perfect Competition Perfect competition is a market form in which no producer or consumer has the power to influence prices in the market. This leads to an outcome which is efficient, according to the economic definition of pareto efficiency The analysis of perfectly competitive markets provides the foundation of the theory of supply and demand. One example of perfect competition in the real world is the agricultural industry, whose large amount of suppliers, relatively inelastic …

…In conclusion, many differences can be spotted between the two markets and how they operate, for example firms under Monopolistic Competition depend more on the price level where as firms under Oligopoly depend more on non price competition methods, such as advertising and marketing. Prices in oligopolies are likely to be stable as firms rely more on non-price competition to boost their sales and profits. Resources 1. Macroeconomics : understanding the wealth of nations: Miles and Scott: 2002