Advantages And Disadvantages Of Perfect Competition

To compare pure competition to a monopoly we must understand the definition of both and what they provide to the market. A pure competition can be look at as a free market where the consumer has many options to choice from and there is a lot of competition within the market, which helps the consumer both in price and in quality. Many identified that pure competition is the standard to gauge the market for performance. While in a monopoly, there is no opposition to provide the best or cheapest product to the consumer. In a monopoly, the consumer is at the will of the manufacturer. A monopoly has control over the whole sector involve a product. No competition usually pays off in high price and more profits. The consumer is the one that

A flawlessly competitive market has several different representatives selling the exact same products. These representatives are considered to be price takers in reference to the competition. Price takers are firms that have no market power. They simply have to take the market price as given (Lumen, 2017). A monopoly starts when a single company sells a product that cannot be reproduced. Microsoft is a perfect example of a company that is seen as a monopoly due to its control of the operating systems market.

In economics, a monopoly is a single seller. In law, a monopoly is a business entity that has significant market power, that is, the power to charge high prices.[4] Although monopolies may be big businesses, size is not a characteristic of a monopoly. A small business may still have the power to raise prices in a small industry (or market).[5]

Two different market structures are monopoly and oligopoly. Oligopoly is a type of monopoly but isn’t exactly the same. Monopoly is the structure that most businesses have which doesn’t have much competition. Oligopoly is a rather difficult business structure for new companies to join.

Monopoly: a market structure in which one firm has complete control oversupply allowing to set a profit maximizing price. A market complete dominated by a single firm where it has complete control over total supply. They produce the unique product with no substitutes, the firm is a price maker and by changing supply the can charge what they want to maximize profit.

A pure competition market may be be rare in the real world, but it acts as a vital introduction into the topic of markets. To

Monopoly is a term to describe an industry where a seller of a product or service does not have a competitor offering a close substitute. The word is derived from the Greek words monos (meaning one) and polein (meaning to sell). Rarely does a pure monopoly exist. In a pure monopoly there is only one company making and selling the item in question; however there can also be the situation where there is one company who has the bulk of sales and the other firms in the same market have little or no impact on the overriding company. Due to lack of competitors, the monopoly company has control of the supply and price of the good or service, unless there is government intervention. The monopoly will

The major market structures that impact our current economy are perfect competition, monopolistic competition, oligopoly, and monopoly.

A perfectly competitive market refers to that market structure where the existing firms in the industry are small and have identical products, and where no firm is bigger than the other such that it can control the market prices. In the long run therefore, the firms incur only economic losses or just normal profit. An economic profit usually comes by when the revenue is more than the opportunity cost of the inputs. So when a firm is making negative economic profits it clearly shows that some costs are not being met as required and so it may lead a firm to exit that market. In a perfectly competitive market, there are always no economic profits in the long run.

In economic theory, perfect competition describes markets such that no participants are large enough to have the market power to set the price of a homogeneous product. Because the conditions for perfect competition are strict, there are few if any perfectly competitive markets. Still, buyers and sellers in some auction-type markets, say for commodities or some financial assets, may approximate the concept. Perfect competition serves as a benchmark against which to measure real-life and imperfectly competitive markets.

A competitive market consists of many buyers and sellers. Markets thrive because an equilibrium price is established through natural competition and no single buyer or seller can affect that price. Instead both buyer and seller must take the price given by the market based on the dynamics of

In the traditional market, consumers decide how much to consume and suppliers decide how much to supply and prices coordinate the decisions. For perfect competition it is assumed inter alia that there is: perfect information so that individuals are fully informed about prices, qualities etc; a lot of buyers and sellers; no single buyer or seller that has influence on the price.

Monopolistic you can say “in reality, the closest to perfect competition is monopolistic competition where part of productive and allocative inefficiency is traded for variety and product differentiation” (Papatheodorou, 2006, pg.224). In a monopolistic competition is firm where a market situation with a relatively large number of sellers offering similar but not identical products. Certain examples of monopolistic competition are fast food companies. Another example of monopolistic competition is clothing stores. For a lot of firms each has a small percentage of the total market.Differentiated products are a variety of the product makes monopolistic

Perfect competition: in this competition, no participant dominates the market thus; no specific seller has the power to set the prices of homogeneous goods. This therefore makes the conditions of a perfect competitive market stricter than the rest of the market structures. In this market, AT&T should be willing to sell their services in a certain price that reciprocates to their demand to maximize profits.

That means firms give difference sort of consumers as difference price which might lead consumers are not satisfaction. Because of there is no transparency in the case of monopoly. “In a case of monopoly in the absence of any competition, there is a tendency of the seller to be complacent which in turn leads to seller selling low-quality products and providing poor customer service as a customer has no choice because there are no substitutes due to lack of competition(Economics help, 2016).”