Question

Distinguish between the following:

Perfect competition and Monopoly

What are the two differences between perfect competition and monopoly?

Make a comparison between monopoly and perfect competition.

Compare the results of perfect competition and monopoly.

Distinguish Monopoly from Perfect competitive markets.

In what ways does perfect competition differ from monopoly?

State any two differences between perfect competition and monopoly.

Distinguish between monopoly and perfect competition on the basis of (i) AR curve, (ii) control over the market price.

Answer 1

Sr. No.	Feature	Perfect Competition	Monopoly
1.	Number of Sellers	In a perfect competition market, there are a very large number of sellers.	In a monopoly market, there is only one seller.
2.	Nature of Product	In a perfect competition market, firms sell homogeneous (identical) products.	In a monopoly market, the firm sells a unique product with no close substitutes.
3.	Price Control	In a perfect competition market, a firm is a price-taker and has no control over price.	In a monopoly market, the firm is a price-maker and has full control over price.
4.	Entry and Exit	In a perfect competition market, there is free entry and exit of firms.	In a monopoly market, there are barriers to entry that may be legal, natural, or artificial.
5.	Demand Curve (AR curve)	In a perfect competition market, the demand curve (AR curve) is perfectly elastic or horizontal.	In a monopoly market, the demand curve (AR curve) is downward-sloping.
6.	Long-Run Profit	In a perfect competition market, firms can earn only normal profits in the long run.	In a monopoly market, the firm can earn supernormal profits even in the long run.
7.	Knowledge of Market Conditions	In a perfect competition market, buyers and sellers have perfect knowledge of market conditions.	In a monopoly market, knowledge of market conditions is imperfect, and the firm may hide information.
8.	Examples	Examples of perfect competition include wheat, rice, and salt (in theory).	Examples of monopolies include Indian Railways and local electricity boards.