ese few products.
2.1.1 Diagram
The Monopolist and Profit Maximization
In the diagram, the quantity of produced and price charged has own control for both of it. That also, entire demand curve for goods and services produced. So that, it will facing a downward slopping demand curve in the diagram. Equivalently, a monopoly never operates in the inelastic portion of its demand curve.
Monopolist Profit Maximization
What happens if the monopolist later faces a demand curve such as D1? In that case, the monopolist cannot cover costs and will go out of business.
2.1.2 Demand, Marginal Revenue, and Elasticity
In the diagram, demand curve is elastic as there many firms. So that, there is lack of close substitutes. The profits shown as abnormal where the shaded area and competitor the short run.
As shown in the graph above, a monopolist facing demand curve D0 will produce quantity Q0 and the price charged will be equal to P0.
2.1.3 Conclusion
All in all, monopoly have four characteristics of structure. Besides that, monopoly is the sole provider of goods and services. The monopoly market is still solely by mutually beneficial exchange of firm exist and many.
3.0 Difference between Perfect competition, monopolistic competition, oligopoly, and monopoly
Perfect competition, monopolistic competition, oligopoly and monopoly have their own respectively features. Their characteristic of their four markets is not same. In monopoly, the market structure in which there is only one producer and seller for a product. Oligopoly is only few firms that make up an industry and select group of firms has control over the price. Monopoly and oligopoly has high barriers to entry. Then, monopoly structure is opposite for perfect competition. Perfect competition are has many buyers and sellers, many products that are similar in nature and there are many substitutes.
3.1 Differentiate between perfect competition, monopolistic competition, oligopoly and monopoly
3.1.1 Perfect competition
Perfect competition is a market is a possible market where competition is at its greatest in possible level. The products are homogeneous and seller can easily enter and exit from their market.
Number of seller and buyers
Perfect competition is very large numbers of firms in the market. Perfect competition also existence of large number of buyers and sellers. There is no dominating firm and all firms are usually small and are price takers, because the individual sales volume is relatively small compared to market volume. Perfect competition also, has many buyers and sellers, many products that are similar in nature and as a result, many substitutes. This ensures that no single firm can exert market control over price or quantity. If one firm decides to double its output or stop producing entirely, the market is unaffected. The price does not change and there is no discernible change in the quantity exchanged in the market.
Unrestricted to entry and exist
The second characteristics of perfect competition is there are unrestricted on the entry and exist of both buyers and sellers. A firm can easily enter into perfect competition market and leave the market at any time, if that firm cannot continue the firm.
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