Question

Distinguish between monopoly and perfect competition based on the AR curve.

Answer 1

Sr. No.	Basis	Monopoly	Perfect competition
1.	AR Curve	The AR curve of a monopolist is downward-sloping.	The AR curve of a monopolist is a horizontal line parallel to the x-axis.
2.	Reason	Being the only seller in the market, a monopolist has to reduce the price to increase sales.	Since firms can sell any amount at the prevailing market price, their average revenue stays the same.
3.	Elasticity	The demand curve is less elastic because the monopolist faces less competition.	The demand curve is perfectly elastic, as firms are price takers.
4.	Market Power	The monopolist has full control over the market price.	No single firm has control over the price, as it is determined by market supply and demand.