Answer to Question #205998 in Microeconomics for Ruchi

Question

difference between monopoly and perfect competion for 10 marks

Answer 1

Monopoly market is based on a single firm dictating supply as well as price level of products. Perfect competition is based on many firms in a situation where there is no firm controlling the market. Considering the price and output, in Monopoly price tends to be more than the average cost while in perfect competition, marginal cost is the same as the price. The equilibrium in monopoly may be realized when if marginal cost is either constant, failing or rising, while in perfect competition, equilibrium tend to be possible only if MC = MR, as MC cuts MR curve from downwards.