Point out the differences between perfect competition and monopoly on – InterviewSolution

InterviewSolution

1.

Point out the differences between perfect competition and monopoly on the basis of :(i) Number of sellers (ii) Market price (iii) Entry of Firms (iv) Type of products produced

Answer»

Basis	Perfect Competition	Monopoly
(i) Number of Sellers	There are very large number of sellers.	There is a single seller.
(ii) Market price	Firm is a price-taker.	Firm is a price-maker.
(iii) Entry of Firms	There is freedom of entry and exit. So there is no possibility of abnormal profits and losses in the long run.	There is restriction on entry and exit. So, a firm can earn abnormal profits and losses in the long run.
(iv) Type of products produced	The product is homogeneous. i.e., it is identical in all respects.	There are no close substitutes of the product.

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