![Differences and similarities between pure monopoly and monopolistic competitive markets Differences and similarities between pure monopoly and monopolistic competitive markets](https://digitalteachers.co.ug/wp-content/uploads/2022/09/Bbosa-Science.png)
Differences and similarities between pure monopoly and monopolistic competitive markets
Differences
- In pure monopoly there is only one producer/seller/firm while in competitive monopolistic competitive markets there are many producers i.e. no completion exist in pure monopoly while competition exists in monopolistic competitive markets
- In pure monopoly entry to the market is blocked while in monopolistic competitive market, there is free entry and exit
- In pure monopoly there is no persuasive advertisement while in competitive monopolistic market there is persuasive advertisement
- The demand/average revenue curve in pure monopoly is inelastic while that of competitive monopolistic market is elastic
- In pure monopoly one product without close substitute is produces while in monopolistic competitive market firms produce differentiated products
- In the long run, pure monopoly firms earn abnormal profits while monopolistic competitive markets earn normal profits
- In pure monopoly a form practices price discrimination which is not the case in competitive monopolistic market.
Similarities between pure monopoly and monopolistic competitions
- Existence of excessive capacity /produce less than installed capacity.
- The producer/seller/firms in both are price markers
- The demand//AR curves in both are down sloping from left to right
- In firms in both situations earn abnormal profits
- Both market attains equilibrium output at a point where P= AR but greater than MR =MC
- In both market situations, there are many byers/customers.
CATEGORIES Economics
TAGS Dr. Bbosa Science