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Differences between perfect competition and monopoly

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Differences between perfect competition and monopoly

Differences between perfect competition and monopoly

Basis

Perfect competition

Monopoly

1. Number of firmsThere is a large number of firms in an industry under perfect competition.In the case of a monopoly, there is only one firm under the industry.
2. ObjectiveThe objective is sales maximization.The objective is profit maximization.
3. Entry and exit conditionFirms are free to enter and exit from the industry under this market.In the case of monopoly, there is a strict barrier in the entry and exit of the firm .
4. State of profitIn the long run, a firm earns only a nominal profit in perfect competitionIn the case of monopoly, the firm can enjoy supernormal profit in the long run.
5. Nature of AR and MR curvesUnder perfect competition, both AR and MR curves are equal and parallel to the x-axis.Under monopoly, both AR and MR curves are downward sloping.
6. PriceThe price is uniform and stable.The price may change.
7. Buyers and sellersThere are large numbers of buyers and sellers.There is a single seller and multiple buyers.
8. Price makingThey are price takers.They are price makers.
9. Nature of productionUnder perfect competition, the products are homogeneous.Under monopoly, products are unique.

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