Question
Make a difference between perfect competition, monopoly and monopolistic competition.
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S .No
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Basis
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Perfect competition
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Monopoly
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Monopolistic competition
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1.
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Number of sellers
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There are very large number of sellers and no individual seller has control over market supply.
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There is a single seller and the monopolist has full control over the supply.
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There are large number of sellers. So, a firm does not have much impact on the market supply.
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2.
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Nature of product
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The product is homogeneous. It is identical in all respect.
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There are no close substitutes of the product.
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Products are differentiated on the basis of brand, size, colour, shape, etc.
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3.
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Entry and exit
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There is freedom of entry and exit. It leads to absence of abnormal profits and losses in long-run.
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There is restriction on entry and exit. So a firm can earn abnormal profit and loss in the long-run.
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There is freedom of entry and exit. So, a firm earns only normal profits in the long-run.
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4.
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Price
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Firm is a price-taker as price is determined by the industry.
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Monopolist is a price-maker as firm and industry are one and the same thing.
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Firm has partial control over price due to product differentiation.
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5.
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Level of knowledge
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Buyers and sellers have perfect knowledge about market condition.
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Buyers and sellers do not have perfect knowledge about market condition.
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Buyers and sellers do not have perfect knowledge due to product differentiation and selling cost incurred by seller.
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6.
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Selling cost
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No selling costs are incurred.
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Selling costs are incurred.
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Heavy selling costs are incurred.
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Output (Units)
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1
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2
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3
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4
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5
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6
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7
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MC (₹)
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10
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20
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30
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40
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50
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60
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70
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