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Compare and contrast the outcomes with respect to price and output under a monopoly versus a perfectly competitive market. In which situation are consumers better off? Why?
A monopoly is a price-giver (they set price), where as in perfect competition firms are price-takers (the price of the good is determined by the market equilibrium). A monopoly can choose how much they want to produce. They will produce at a level that maximizes their profit. This level is typically lower than in a market of perfect competition. As a result fewer people will be able to afford the good that a monopoly produces than if there were more firms in the market. Consumers are better off in…

a competitive market because price and quantity are at equilibrium. That means that the price is the lowest that it can be, and quantity supplied is equal to the quantity demanded. So more people are able to get the good, and at a cheaper price then under a monopoly. If you have any questions, just comment. If this helps, please rate.



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