SUBMITTED BY: NUSRAT YASMIN

Perfect competition A perfectly competitive market is a hypothetical market where competition is at its greatest possible level. Neo-classical economists argued that perfect competition would produce the best possible outcomes for consumers, and society.

Monopoly A market structure characterized by a single seller, selling a unique product in the market. In a monopoly market, the seller faces no competition, as he is the sole seller of goods with no close substitute.

Compare between Monopoly and Perfect Competition Basis of ComparisonPerfect CompetitionMonopoly 1. Goods ProducesBuyers and sellers deal in standard products. No product differences. Ex- agricultural products like wheat etc. Buyers and sellers deal in unique product. No close substitute goods are available. Ex- Electricity, Water etc. 2. No. of firmsIn Perfect Competition, there are very large number of firms. In Monopoly, there is only one firm. The firm is the industry. 3. Sellers and BuyersIn Perfect Competition, Large number of sellers and buyers. In Monopoly, one seller and large number of buyers.

Basis of ComparisonPerfect CompetitionMonopoly 4.Price ControlEach firm is so small that changes in its own output do not affect market prices, i.e. firms are price taker. Changes in the firm’s output cause changes in the price, i.e. the firm is a price maker. 5. Freedom of Entry and Exit Completely free entry and exit from the industry, i.e. No barriers to entry and exit. Significant barriers to entry and exit, preventing new firms from entering and competing with the monopolist. 6. Perfect InformationAll the buyers and sellers know the aspects of the market, including price, quality and quantity of the good. No perfect information in the market. Neither the sellers nor buyers know all aspects of the market.

Basis of Comparison Perfect CompetitionMonopoly 7. Profit Making Possibility The firm can earn only normal profit in the long run and may earn super-normal profit in the short run. Monopoly firm earns super- normal profit both in long run and short run. 8. Government Intervention In Perfect Competition, there is very little govt. intervention. The Govt. can impose taxes specific to the industry or profit being made. If a monopoly refuses to pay these fee’s they can be shut down by the Govt. 9. Specific trait to market Buyers can easily switch between sellers with little to no difference in product and price. Firms who operate as a Monopoly are a one of in their area. They have control of their market.

Basis of ComparisonPerfect CompetitionMonopoly 10. Nature of Competition In Perfect Competition, pure and perfect competition in price In Monopoly, no competition at all. No price or product competition. 11. supplyIn Perfect Competition, i.Supply comes from large number of sellers. ii.Individual supply is negligible. In Monopoly, Supply from only one seller, hence absolute control over the supply. 12. ApplicationPerfectly Competitive Market is quite unreal. Pure Monopoly Market is rare but elements of monopoly are there in markets.

THANK YOU ALL