Comparison of Perfect Competition and Monopoly Essay

Comparison of Perfect Competition and Monopoly - Essay Example This essay describes two of the market structures, such as perfect competition and monopoly by comparing and contrasting the various defining characteristics of both structures. Economics classify markets, according to the industry within which the firms work and how they affect the overall economy of the country. However, on the other hand, industry is the combination of various economic variables, which determine the overall nature, characteristics as well as extent of the competition within that particular industry. There are different market structures which define the various and unique characteristics of the different market structures present in the economy. Monopoly and perfect competition are two of the most important market structures which are present in the economy offering different advantages and disadvantages to the consumers. Perfect competition is a market structure in which there are large numbers of fully informed buyers and sellers of a homogenous product with no obstacles to entry or exit of firm in the long run. Monopoly is often characterized by the market power where monopoly as the ability to influence the market specially in terms of the total quantity produced and sold in the market. It is believed that perfect competition is something where resources are efficiently utilized and efficiency is achieved as perfect market tends to maximize the total utility of the consumers. Monopoly firm has the ability to charge higher prices which ultimately reduce the consumer surplus for the firm.