Perfect competition is more desirable than monopoly because perfect competition result in large output and lowest price Discuss?

Answer 1

in terms of the consumer, a monopolistic firm can raise his prices higher than his costs as much as he wants because there are no rivals to compete with in terms of price. In fact the demand curve for a monopolistic form is almost full inelastic. However, it is just almost inelastic, because there are some indirect alternatives to every good or service provided. However, in cases where the consumer really can't do without the good, he is forced to pay the high prices offered by the monopolistic firm. Example, no matter how much fuel rises in price, people will still demand of it, even if they can barely afford it, because it has become a necessity which allows us to carry out everyday tasks.

Hence, Perfect Competition is better because it allows the consumer to benefit from the lowest price possible that the firm can provide. This is because, as there should be very manyfirms in a Perfect Competitive market structure, they all of them are competing with the price, and price tends to get lower in the long-run terms as the market's supply curve tends to shift outwards. Please don't understand me wrong, firms are price takers, all products and prices are homogenous to all firms. But when it comes to price this is caused because the firms are competing so much to win the largest market share that they eventually end up all selling with the same price and hence, selling at their marginal cost of producing the good.