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In perfect competition, the market consists of a large number of buyers and sellers of an identical good. A real world example that is close to this is the market for farm commodities, such as wheat or soybeans. The critical feature is that there are so many buyers and sellers that each buyer and seller assumes that their behavior will have no impact on the final market clearing price. That is, they assume the price will be $X no matter how much they buy and sell and furthermore they assume that they can buy and sell as much of the good as they want/can afford at that price. This sort of assumption is called "price taking behavior".
In contrast, a monopolistically competitive market has many sellers, but they each sell a unique good. A good example of this is the soda market, which has many competing sellers such as Coke, Pepsi, Royal Crown, 7up, etc. Here, each seller can set whatever price they want for the good that they control, but they have to take into account how many other goods are close substitutes for the good that they sell. If there are many close substitutes, the end result will be similar to a perfectly competitive market; each seller will earn zero economic profit. In contrast, if no close substitutes exist, the market is a plain old monopoly and the monopolist earns economic profits.
What else can I help you with?
What conditions does competition occur?
What is the difference between perfect competition and pure monopoly
What is difference between perfect competition and oligopoly?
the difference between perfect and imperfect oligopoly
The opposite of perfect competition is?
It's a monopoly.
A significant difference between perfect competition and monopolistic competition is that?
Product differentiation
What best states the main difference between a monopoly and a monopolistic competition?
monoplistic competition involves slightly differentiated products while monoply involves a single product.
What conditions does competition occur?
What is the difference between perfect competition and pure monopoly
Use examples to show the difference in the profit maximization goal of perfect competition and monopoly?
Shut
What is difference between perfect competition and oligopoly?
the difference between perfect and imperfect oligopoly
Types of Market Competition?
Perfect Competition, Monopoly, Monopolistic Competition or Oligopoly
The opposite of perfect competition is?
It's a monopoly.
A significant difference between perfect competition and monopolistic competition is that?
Product differentiation
What best states the main difference between a monopoly and a monopolistic competition?
monoplistic competition involves slightly differentiated products while monoply involves a single product.
Different types of market structure?
monopoly,perfect competition,monopolistic competition,
Why is Perfect Competition as a model better for society than unregulated Monopoly?
Perfect competition allows for fairer price structures than those that would likely be seen in a monopoly.
What are the two extreme market structure?
Perfect competition and monopoly
Which is the main difference between perfect competition and monopolistic competition?
In monopolistic competition, sellers can profit from the differences between their products and other products.
What are the 4 basic market structure and explain how they differ from one another?
The four basic market structures are perfect competition, monopolistic competition, oligopoly, and monopoly. Perfect competition has many small firms producing identical products, while monopolistic competition has many firms selling similar but not identical products. Oligopoly has a few large firms dominating the market, while a monopoly has a single firm controlling the entire market. The main difference between them lies in the number of firms in the market and the level of product differentiation.
