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What are the main characteristics associated with perfect competition and monopoly? What do these characteristics suggest...

What are the main characteristics associated with perfect competition and monopoly? What do these characteristics suggest about the degree of market power possessed by an individual firm in each of these markets?

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Answer #1

Characteristics of perfect competition

There are many sellers and buyer.

They produce homogeneous product.

They are price taker.

There is free entry and exit.

Characteristics of monopoly.

There is a single seller.

They sales product which have no close substitute.

There is barriers to entry.

They are price maker.

What do these characteristics suggest about the degree of market power possessed by an individual firm in each of these markets?

Because monopoly is a single seller, it is industry it self. So it has market power.

But in perfect competition, there are many sellers and buyer. They have no market power mso they are price taker.

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