Question

4- Please compare and contrast oligopoly and monopoly. You are expected to write about the similarities and differences between these two market types. You are also expected to comment about the economic efficiency of these two market types.

Answer 1

Both monopoly and oligopoly faces downward sloping demand curve. Both produces at a point where MR=MC and both can earn positive economic profit in long run. Neither of the firm produces at economic efficiency because none of them produces at min of AC which means both have some excess capacity. Both market structure firms have some market power

Monopoly is a market structure where there is only one seller and in Oligopoly there are few sellers. There are cost to barrier in both the market structure. Both can sell either homogenous or differentiated goods