Perfect and Monopoly Markets and their difference

CHARACTERISTICS OF PERFECT COMPETITION 1.Firms be humble and plenty in rate: - In perfect competition there argon a large number of stiffs in the securities industry. Each of them is in truth small as compared to the whole industry. Individually, none of them is even good to fulfilling the subscribe to of the whole industry. 2.Homogenous products: - All firms produce/provide like products/services. and then it makes no difference to the buyer which sellers product he buys. 3.Perfect culture: - All sellers and buyers know the wrongs at which all the legal proceeding restrain place and what the possible alternatives are. Information costs are zero. 4.Demand is absolutely elastic and the firm is damage worryr: - Since the companies several(prenominal)ly produce a very small percentage of the total industry output, they capture no influence on the market price. They stop on the whole accept the prevailing market price. Figure A to a lower place shows the firm as a price-taker and form B shows the inquire and supply of the industry. Here P1 is the market price at which all transactions for the commodity/service take place. The demand curve for individual firms is perfectly elastic. At market price the firm grass sell as frequently as it produces (q1, q2 or whatever output).

But if the firm charges a rate higher than the market price its customers ordain crusade to competitors product and the firm will sell nothing. If the firm charges a price below P1 its price will not proceed its costs and will olibanum incur losses. 5.No barriers to founding: - in that respect are no barriers for e ntry to the industry. Any firm can enter the! market and the posit sellers cant stop that firm from entering. 6.No paranormal profits: - In massive run no firm can earn supernormal profit as illustrated in figure B below. If a firm is... If you want to number a full essay, post it on our website: BestEssayCheap.com

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