Question

Is it better to operate in a purely competitive market or in a monopoly? Please discuss...

Is it better to operate in a purely competitive market or in a monopoly? Please discuss the pros and cons from the following stakeholders’ point of view:

  • Customer (Product and Price)
  • Executive Management of the Firm (Setting the Strategic Direction)
  • Employees (Development Opportunities)
  • Shareholder (Return on Equity)
  • Society (Innovation and Philanthropy)
Business   Operations-Management   
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Homework Answers

Answer #1

Competitive market is better for the consumers because they will have access to more quantities of good for lower prices.

The price in perfect competition is always better than price in monopoly competition. In monopolistic competition firms are price makers because they control the prices of goods and services whereas in perfect competition prices are dictated by supply and demand and firms makes enough profit to be in business and no more. If they were to earn more profits, other companies would also enter the profit and profit go down.

Pros and Cons:

From Consumer point of view: It has very low chances of consumer exploitations because in this market structure seller do not have a monopoly for pricing power so they cannot influence it.

Consumer get standardised product and they become top most priority of firms.

The biggest disadvantage of perfect competition is that there are very few barriers to entry any firm can enter the market and start selling its product, there are no such restrictions.

The crucial advantage of this market belongs to customers and all the other have to suffer with this because of their business..

Thankyou!

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