Answer to Question #211041 in Microeconomics for Charlie

Question

compare the possibility of earning Economic profit by the firms operating under the three types of market, viz. perfect competition, monopoly, and monopolistic competition 

Answer 1

Answer.

The three types of markets have the common ability of earning economic profits to the farm.There is however some differences and similarities in the different ways in which the individual markets earn economic profits to the respective firms.A comparison of the market types reveals the following similarities.

Among the similarities of both market types is that they are faced with similar cost functions .Another similarity that is important in attaining economic profit is in terms of production where it similar in both cases by incurring production functions. To add in that,they both am at maximising profits in there persuit to earning economic profits to the firm.

The differencea that arise in the three market types include competition having very many competitors.They also have a very low entry barriers with homogeneous and identical products being sold. That is the difference in monopoly competition which is mainly dominated by single sellers with very fee competition. That easens the economic profit management to a certainty extent.