Imperfect Competition

Perfect competition: A market structure characterized by a large number of small firms, all producing identical products, where no single firm can influence the market price.

Monopolistic competition: A market structure where many firms offer products that are similar but not identical, allowing them to have some control over pricing due to product differentiation.

Oligopoly: a market structure in which a small number of dominant firms control the majority of the market share
Pure Monopoly: a market structure in which a single firm is the sole producer of a product that has no close substitutes

Imperfect Competition: A market situation where the assumptions of perfect competition are violated, leading to firms having some degree of market power and the ability to influence prices.

  • Hard Barriers to Entry

    • High Startup Cost

    • Geography of Ownership

MR=MC Profit Maximixing

MR≠D

D=P

MC=MR Profit maximizing quantity

Monopoly is going to always produces where MR is positive Demand is elastic

Characteristic of Monopoly

  • One Large firm

  • Unique product

  • High Barriers Firms can not enter the industry

  • Monopolies are Price Makers


  1. False

  2. False

  3. False

  4. False

  5. False

  6. False

Natural Monopoly- It is natural for only one firm to produce bethac they can prodice at the lowest cost