Question
Make a difference between perfect competition, monopoly and monopolistic competition.
S .No | Basis | Perfect competition | Monopoly | Monopolistic competition |
1. | Number of sellers | There are very large number of sellers and no individual seller has control over market supply. | There is a single seller and the monopolist has full control over the supply. | There are large number of sellers. So, a firm does not have much impact on the market supply. |
2. | Nature of product | The product is homogeneous. It is identical in all respect. | There are no close substitutes of the product. | Products are differentiated on the basis of brand, size, colour, shape, etc. |
3. | Entry and exit | There is freedom of entry and exit. It leads to absence of abnormal profits and losses in long-run. | There is restriction on entry and exit. So a firm can earn abnormal profit and loss in the long-run. | There is freedom of entry and exit. So, a firm earns only normal profits in the long-run. |
4. | Price | Firm is a price-taker as price is determined by the industry. | Monopolist is a price-maker as firm and industry are one and the same thing. | Firm has partial control over price due to product differentiation. |
5. | Level of knowledge | Buyers and sellers have perfect knowledge about market condition. | Buyers and sellers do not have perfect knowledge about market condition. | Buyers and sellers do not have perfect knowledge due to product differentiation and selling cost incurred by seller. |
6. | Selling cost | No selling costs are incurred. | Selling costs are incurred. | Heavy selling costs are incurred. |
Generate a complete, print-ready paper with questions like this in minutes — across 16+ boards, with answer keys.