Distinguish between Perfect Competition and Monopoly. 

Perfect Competition

Monopoly

1.

A very large number of sellers of product.

1.

A single seller (firm) of product.

2.

Products are homogeneous.

2.

Product has no close substitute.

3.

Free entry and exit of the firms.

3.

Very difficult entry of a new firm.

4.

Firm is the price-taker not the price maker. It has no market power.

4.

Firm is price-maker not price taker. It has market power.

5.

Price is uniform in the market. Price = MC.

5.

Due to price discrimination price is not uniform. Price > MC.

6.

AR and MR curve is a straight line parallel to X-axis. AR = MR.

6.

AR and MR curves are downward sloping from left to right. MR is less than AR.

7.

In the long-run, a firm earns only normal profit.

7.

In the long-run, the firm manages to earn abnormal profit as entry is restricted.

8.

A firm has its supply curve on the basis of the given price.

8.

There is no supply curve as such since the firm itself decides its output and price.