Perfect and Monopoly Markets and their difference

CHARACTERISTICS OF PERFECT COMPETITION 1.Firms are small and plenty in number: - In perfect competition there are a large number of firms in the market. Each of them is very small as compared to the whole industry. Individually, none of them is even near to fulfilling the demand of the whole industry. 2.Homogenous products: - All firms produce/provide identical products/services. Thus it makes no difference to the buyer which seller's product he buys. 3.…

…the losses) to maintain the monopoly position. DIFFERENCES BETWEEN PERFECT COMPETETION AND MONOPOLY A. PERFECT COMPETETIONB. MONOPOLY 1. Firms are small and plenty in number.1. Only one firm and it is big. 2. Demand is perfectly elastic.2. Demand is inelastic. 3. Firm is price taker.3. Firm is price maker. 4. No supernormal profits in long run.4. Firm can earn supernormal profit. 5. No barriers to entry.5. High barriers to entry. 6. No economies of scale.6. Often firm enjoys economies of scale.