Scribd Logo
Upload

Welcome to Scribd!

  • 260 views

    Perfect Competition Vs Monopoly

    Uploaded by

    Ods Guys
    The document compares and contrasts perfect competition and monopoly market structures. Both market structures aim to maximize profits by producing where marginal cost equals marginal revenue. However, they differ in key ways. A perfect competition market has many small firms and homogeneous products, while a monopoly has a single firm without close substitutes due to barriers to entry. As a result, firms are price takers in perfect competition but price makers in monopoly. Monopolies can earn abnormal profits while perfect competition earns only normal profits in the long run.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd

    Perfect Competition Vs Monopoly

    Uploaded by

    Ods Guys
    260 views36 pages
    The document compares and contrasts perfect competition and monopoly market structures. Both market structures aim to maximize profits by producing where marginal cost equals marginal revenue. However, they differ in key ways. A perfect competition market has many small firms and homogeneous products, while a monopoly has a single firm without close substitutes due to barriers to entry. As a result, firms are price takers in perfect competition but price makers in monopoly. Monopolies can earn abnormal profits while perfect competition earns only normal profits in the long run.

    Original Description:

    ppt

    Copyright

    © Attribution Non-Commercial (BY-NC)

    Available Formats

    PPTX, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    The document compares and contrasts perfect competition and monopoly market structures. Both market structures aim to maximize profits by producing where marginal cost equals marginal revenue. However, they differ in key ways. A perfect competition market has many small firms and homogeneous products, while a monopoly has a single firm without close substitutes due to barriers to entry. As a result, firms are price takers in perfect competition but price makers in monopoly. Monopolies can earn abnormal profits while perfect competition earns only normal profits in the long run.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    260 views36 pages

    Perfect Competition Vs Monopoly

    Uploaded by

    Ods Guys
    The document compares and contrasts perfect competition and monopoly market structures. Both market structures aim to maximize profits by producing where marginal cost equals marginal revenue. However, they differ in key ways. A perfect competition market has many small firms and homogeneous products, while a monopoly has a single firm without close substitutes due to barriers to entry. As a result, firms are price takers in perfect competition but price makers in monopoly. Monopolies can earn abnormal profits while perfect competition earns only normal profits in the long run.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 36

    COMPARE THE FEATURES OF PERFECT

    COMPETITION AND MONOPOLY MARKET STRUCTURES

    Group : 01

    LOGO
    Economics Group Presentation HND: Qs 03 BCAS- Jaffna

    05.03.2014
    1

    GROUP MEMBERS

    KADOTGAJAN BAKEERATHAN

    SUMAN

    VINOJ

    SAKEESAN

    CONTENTS

    1. Introduction. 2. Perfect Competition Market. 3. Monopoly Market. 4. Compare And Contrast. 5. Conclusion.

    Introduction

    Definition of Perfect competition market. Definition of Monopoly market. Characteristics of Perfect Competition market. Large member of buyers and sellers. Free entry and exit. Both buyers and sellers are price takers. Can earn ordinary profit in long term.

    Introduction cont.
    Characteristics of Monopoly market. Single seller No close substitutes Barriers to entry Can earn Abnormal Profits Compare and Contrast. Conclusion.

    Perfect Competition Market

    Perfect competition is the market in which


    there are large number of buyers and sellers.

    Characteristics of Perfect Competition Market

    Large member of buyers and sellers.

    Free entry and exit. Perfect knowledge.


    Identical product. No government intervention. Both buyers and sellers are price takers.

    Can earn ordinary Profit in Long Term


    9

    Profit-Maximizing Level of Output

    The goal of the firm is to maximize profits.


    Profit is the difference between total

    revenue and total cost. A firms Equilibrium point is MC=MR

    10

    Profit-Maximizing

    11

    Shutdown
    A short-run decision not to produce anything because of market conditions If shutdown in short-run, must still pay fixed cost

    Exit
    A long-run decision to leave the market If exit in long-run, zero costs

    Sunk cost
    A cost that has already been committed and cannot be recovered
    12

    Zero-Profit condition
    The process of entry or exit is complete remaining firms earn zero economic profit Zero economic profit occurs when P=ATC

    13

    14

    What is Monopoly?

    Monopoly is a market situation where there is only a single seller with complete control over an industry. The main cause of monopolies is barriers to entry- other firms cannot enter the market Factors of Monopoly 1. Resource 2. Government 3. Natural factors

    15

    Characteristics of Monopoly Market

    Single seller Lack of Perfect knowledge No close substitutes Barriers to entry Price discrimination Price maker Can earn Abnormal Profits
    16

    Monopoly

    17

    Deadweight loss due to Monopoly

    18

    Monopoly's Revenue
    Quantity Price 0 1 2 3 4 5 6 7 8 11 10 9 8 7 6 5 4 3 Total Revenue 0 10 18 24 28 30 30 28 24 Average Revenue ------10 9 8 7 6 5 4 3 Marginal Revenue ----10 8 6 4 2 0 -2 -4

    Summary
    19

    20

    Comparison

    Comparison

    Similarities

    Differences
    21

    Similarities
    1. Towards Maximum Profit 2. Equilibrium Condition: MC = MR .

    Perfect Competition Market


    22

    Monopoly Market

    Similarities cont.
    3. Determination of Price .

    Perfect Competition Market


    23

    Monopoly Market

    Similarities cont.
    4. Cost Curves .

    Perfect Competition Market


    24

    Monopoly Market

    Similarities cont.

    5. Can earn economic profits in the short run.

    Perfect Competition Market


    25

    Monopoly Market

    Differences
    Perfect Competition
    Large numbers of firms and buyers A single firm cant effect the price

    Monopoly
    Single firm with less buyers A single firm can effect the price

    Producer is Price Taker .


    Consumers Sovereignty (Power) exists No barriers to enter the market

    Price maker .
    Producers Sovereignty Barriers to enter the market

    Perfect Competition Market

    26

    Monopoly Market

    Differences cont.
    Perfect Competition Price Discrimination is not possible Equilibrium Pricing Condition . Monopoly Price Discrimination is possible

    Perfect Competition Market

    27

    Monopoly Market

    Differences cont.
    Perfect Competition Close Substitution exists MR=AR=P=D Demand curves Shape (Ed ) . Monopoly No Substitutions Price > MC. Demand curves Shape (Ed < , >, = 1).

    Perfect Competition Market


    28

    Monopoly Market

    Differences cont.

    Perfect Competition Profit in Short Run Normal, Abnormal, Loss Profit in Long Run Normal

    Monopoly Abnormal profit. Super Abnormal profit.

    29

    Differences cont.
    Perfect Competition : Normal, Abnormal, Loss in SR and Normal Profit in LR

    30

    Differences cont.
    Monopoly : Abnormal profit & Super Abnormal Profit. in SR and LR

    31

    32

    Conclusion
    Several Real world examples Perfect Competition: Agricultural markets Fish market and vegetable or fruit vendors Free software vendors Street food vendors Monopoly Ceylon Petroleum Cooperation Sri Lankan Railways Drugs for Aids patients

    33

    Perfect Competition & Monopoly in Contemporary scenario

    Both markets doesn't exist Because; Governments influences Privatization/ Globalization Sales Promoting Strategies i.e. Ads So we can conclude that the Perfect Competition & Monopoly markets are conceptual markets in the Contemporary scenario.

    34

    Questions?

    35

    LOGO

    36

    You might also like