1 Give 5 Characteristics of a PC firm and monopoly 2 What ar

1. Give 5 Characteristics of a PC firm and monopoly.

2. What are the implications of each of these characteristics?

3. Give a real life example of a monopoly and a PC firm.

Solution

1.

We know that Perfect competition is a market condition there is large number of buyers and sellers selling homogenous product. The price of the product is determined by the industry. That means the firm have zero market power.

Characteristics:

1. Large number of buyers and sellers.

2. Homogenous product

3. Independent decision making

4. Freedom of entry and exist

5. Perfect knowledge of the market

6. Perfect mobility of the factors.

7. Zero transport cost

We know that Monopoly is the market structure there is single seller for the product. So the producer have complete control over the market power.

Characteristics:

1. Single seller

2. No close substitutes of the product

3. No entry and exit of the firm

4. Price disrimination

5. Firm is a price maker

2.

We know that perfect competition and monopoly are the two different market structure. Both shows the opposite characteristics. The differences in market share, Barriers to entry, Price control. In general In the case of monopoly the price are compaitivly higher than in the perfect competition. Becuase the monopolist have complete coontrol over the price. In the case of market share Monopolist have complete share of the market. But perfectly comptitive market has less market power. The control in Perfect competition is the biggest firm in the industry.

3.

We know that Perfect competition rare in the real world. The money market and international capital market is the best example of perfect competition.

In the case of monopoly is the Royal mail, Micro soft, Tesco,etc..