Answer to Question #305598 in Microeconomics for Muchindu

Question

With the help of well-labeled diagrams, compare the long run equilibrium of a firm under a 

 perfectly competitive market structure and a monopoly market structure. [20 marks]

Answer 1

Monopolistic Market vs. Perfect Competition: An Overview

A monopolistic market and a perfectly competitive market are two market structures that have several key distinctions in terms of market share, price control, and barriers to entry. In a monopolistic market, there is only one firm that dictates the price and supply levels of goods and services, and that firm has total market control. In contrast to a monopolistic market, a perfectly competitive market is composed of many firms, where no one firm has market control.