Question:
Compare and contrast the monopoly market structure with a purely competitive market
structure.
Answer:
The monopoly and purely competitive market structure have several differences and
similarities with each other. When it comes to their differences in buyers and sellers, a
Monopoly has only one seller, while the competitive market has many buyers and sellers.
When it comes to firms, a Monopoly has only one firm, while the competitive market has
many firms. When it comes to competition, a monopoly has no competition, while the
competitive market has price competition. When it comes to price, a Monopoly becomes
the price setter or maker, while the competitive market becomes the price takers. When it
comes to supply, a Monopoly has only one supplier, while the competitive market has
many suppliers. When it comes to demand, a Monopoly is inelastic and has a demand curve
sloping downward, while the competitive market is perfectly elastic and has a demand
curve in a horizontal straight line. Lastly, when it comes to barriers, a Monopoly has a high
barrier to enter the market, while the competitive market has no barrier.
Both market structures also have similarities with each other. First, both face the same cost
because they need to meet the demands of the consumers. Second, both face production
function by producing at the maximum level of output based on a given level of input,
avoiding waste as much as possible, and at the lowest cost. Third, both have a large number
of buyers as both markets produce products that are a necessity to the consumers. Fourth,
both aim to maximize profit. Lastly, both have an equilibrium that meets at the point of
marginal cost and marginal revenue.
Compare and contrast the monopoly market structure with a purely competitive market
structure.
Answer:
The monopoly and purely competitive market structure have several differences and
similarities with each other. When it comes to their differences in buyers and sellers, a
Monopoly has only one seller, while the competitive market has many buyers and sellers.
When it comes to firms, a Monopoly has only one firm, while the competitive market has
many firms. When it comes to competition, a monopoly has no competition, while the
competitive market has price competition. When it comes to price, a Monopoly becomes
the price setter or maker, while the competitive market becomes the price takers. When it
comes to supply, a Monopoly has only one supplier, while the competitive market has
many suppliers. When it comes to demand, a Monopoly is inelastic and has a demand curve
sloping downward, while the competitive market is perfectly elastic and has a demand
curve in a horizontal straight line. Lastly, when it comes to barriers, a Monopoly has a high
barrier to enter the market, while the competitive market has no barrier.
Both market structures also have similarities with each other. First, both face the same cost
because they need to meet the demands of the consumers. Second, both face production
function by producing at the maximum level of output based on a given level of input,
avoiding waste as much as possible, and at the lowest cost. Third, both have a large number
of buyers as both markets produce products that are a necessity to the consumers. Fourth,
both aim to maximize profit. Lastly, both have an equilibrium that meets at the point of
marginal cost and marginal revenue.
