Answer to Question #154659 in Microeconomics for Tame

Question

Differentiate between monopoly, oligopoly, and perfect competition. For which situation are most general economic principles stated? Is a monopoly ever desirable for the economic welfare of the public?

Answer 1

A monopoly refers to when a market structure where a business and its product offerings dominate a sector or industry, oligopoly is a market structure with a small number of firms, none of which can keep the others from having significant influence while Perfect competition is a market structure where there is equal number of buyers and sellers.

Monopolistic competition - since it provides strong incentives for innovation, as firms strive to earn profits in the short run as the entry assures that businesses do not earn profits in the long run.

Yes monopoly is desirable for economic welfare of the public since it has an ensured consistent supply of a commodity that is too expensive to provide in a competitive market.