Economic Welfare: Monopoly Vs. Perfect Competition

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Economic Welfare: Monopoly v. Perfect Competition
1. Introduction
Societal welfare or economic welfare is a level of success and standard of living of an individual or group of people. In the field of economics, it refers to the utility, i.e. the measure of the first choice over sets of goods and services, gained through the accomplishment of goods and services. In other words, it is a part of social prosperity that can be attained by economic activities.
2. Criteria of Economic Welfare
Two criteria of Economic welfare are consumer surplus and producer surplus. Consumer surplus measures the economic welfare from the perspective of buyer and producer surplus measures the economic welfare from the perspective
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It enjoys economies of scale and then the benefits are passed to the buyers. Monopolies make a great profit and hence can be used for research and developmental purposes. It makes use of its quality of discriminating costs hence benefiting the weaker section of society. Monopolies can manage to pay for latest technology and machinery. They can provide income to the government in the form of heavy taxes they pay (Bacchiega, 2011).
9. Disadvantages of Monopoly
Disadvantages include the carrying out of services in such a way that it sets poor standards. It exploits the demands of the consumer. Usually, what happen is that product formed by the monopoly is not formed by any other company and hence the customer has to decide between quality and pricing. Also, the reduced completion results in bad quality and outdated products.
10. Perfect Competition
Perfect competition, an economic ideal, is a condition which prevails in a market in which customers and sellers are too large in number and better informed that all essentials of monopoly can get absent and the market price of a product is away from the control of individual consumers and sellers. In economics, the perfect market is the one in which several conditions collectively make a perfect
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Disadvantages of Perfect Competition
Some of the disadvantages of perfect completion are that there is no scope for economies of scale as a large number of firms is in there (Eiteman, 2010). Homogenous products decrease the variation of product in the market. With perfect knowledge, there is no incentive to produce new technology. Lack of supernormal profits means the investment in research and development is unlikely.
14. Monopoly & Perfect Competition
Now monopoly and perfect competitions are two separate and entirely different concepts but similarities can be found between them, for example, there cost functions are the same. The number firm is large in both the markets. The freedom of entry and exit exist in both the markets. Competition between firms can be found in both monopoly and perfect competition. Marginal cost and marginal revenue can be equated in both the markets. In both markets, there are chances of profits and losses. And both companies minimize cost and maximize the profit.
15. Discrepancies between the perfect competition and monopoly
Discrepancies between the perfect competition and monopoly are given below.
15.1. Marginal revenue and
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