Q. What is monopoly and explain its features?
Monopoly is a market situation in which a single seller (firm) controls the entire
supply of a commodity which has no close substitutes. The word monopoly comes from Greek. In
Greek, ‘mono’ means single and ‘poly’ means seller. So monopoly means single seller. Here the
word seller denotes the firm producing and selling the product.
FEATURES OF MONOPOLY
Pure monopoly is characterized by the existence of the following features.
1. Single Seller :
Under monopoly there will be only a single seller (firm) selling the commodity. A
buyer has no choice, but to buy from monopolist.
2. Control over supply:
The monopolist, since he is the only seller in the market, has complete
control over supply. Therefore, he can make the price. Therefore, the monopolist is called
a price maker as distinct from the price taker under perfect competition.
3. No close substitutes:
The product sold by the monopolist will have no close substitutes. If close
substitutes are available, monopoly power will be lost.
4. Restrictions on entry:
Under monopoly, it is difficult for new firms to enter the industry. The monopolist
will try to prevent the entry of new firms. If new firms enter, the monopoly power will be lost
and profits will have to be shared. Therefore, the monopolist will try to prevent the entry of
new firms through a variety of techniques.
5. No distinct between the firm and the industry:
Since there is no only one firm that firm itself is the industry.
Q: What is monopolistic competition and write its features?
Monopolistic competition is a market situation characterized by competition among
fairly large number of firms selling differentiated products which are close substitutes. Perfect
competition and pure monopoly are two extreme forms of market. Perfect competition is very
rare, almost non-existent. The concept of monopolistic competition was formulated by the
American economist Edward Chamberlin.
FEATURES OF MONOPOLISTIC COMPETITION
Monopolistic competition is characterized by the existence of the following features.
Monopoly is a market situation in which a single seller (firm) controls the entire
supply of a commodity which has no close substitutes. The word monopoly comes from Greek. In
Greek, ‘mono’ means single and ‘poly’ means seller. So monopoly means single seller. Here the
word seller denotes the firm producing and selling the product.
FEATURES OF MONOPOLY
Pure monopoly is characterized by the existence of the following features.
1. Single Seller :
Under monopoly there will be only a single seller (firm) selling the commodity. A
buyer has no choice, but to buy from monopolist.
2. Control over supply:
The monopolist, since he is the only seller in the market, has complete
control over supply. Therefore, he can make the price. Therefore, the monopolist is called
a price maker as distinct from the price taker under perfect competition.
3. No close substitutes:
The product sold by the monopolist will have no close substitutes. If close
substitutes are available, monopoly power will be lost.
4. Restrictions on entry:
Under monopoly, it is difficult for new firms to enter the industry. The monopolist
will try to prevent the entry of new firms. If new firms enter, the monopoly power will be lost
and profits will have to be shared. Therefore, the monopolist will try to prevent the entry of
new firms through a variety of techniques.
5. No distinct between the firm and the industry:
Since there is no only one firm that firm itself is the industry.
Q: What is monopolistic competition and write its features?
Monopolistic competition is a market situation characterized by competition among
fairly large number of firms selling differentiated products which are close substitutes. Perfect
competition and pure monopoly are two extreme forms of market. Perfect competition is very
rare, almost non-existent. The concept of monopolistic competition was formulated by the
American economist Edward Chamberlin.
FEATURES OF MONOPOLISTIC COMPETITION
Monopolistic competition is characterized by the existence of the following features.
