"A monopoly can control price or output but not both while a firm in perfect competition can control neither - Discuss.

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“A monopoly can control price or output but not both while a firm in perfect competition can control neither. Discuss

   As we all know that the term monopoly is illegal in our days and in addition we all know that at list all the biggest companies in the world are trying to get that point. However, the only reason that these companies are trying to became a monopoly on the business world, are the power of the monopoly, in other words, the monopolists can control the price on the market or the output and not only… In this essay we are going to look at the differences between company which is monopoly and company in perfect competition. However, it’s easy to understand that in our days it’s very difficult to become a monopoly on the business world, because of the high level of competition between the companies. It’s also difficult to have the perfect competition and in my opinion it’s very close to impossible.

   In economic theories, monopoly can control price or output but not both, while a firm in perfect competition can control neither. However, the differences between monopoly and perfect competition are the below: with the monopoly there is a one seller and many buyers. On the other hand, with the perfect competition there are many buyers and sellers. Another main difference between the monopoly and the perfect competition is that, with the monopoly we can have some barriers to entry and to exit, but with the perfect competition it’s not happening the same. In perfect competition there are not barriers to entry and exit. Finally with the monopoly and the perfect competition there is perfect knowledge and also there is profit maximisation.

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   Monopoly in economic terms is where you have only one company running the industry of the same product. For instance, “Microsoft office” and “Windows”. To achieve having monopoly in today’s business world is a hard thing which requires a lot of work, time and patience. Today the perfect competition exists only in theories but if we take a look at the stock market, we can see that it is very similar and close to the perfect competition. However, in perfect competition we have assumed that all firms and households are price takers in input and output markets. Also ...

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