In perfectly competitive markets, there are so many firms that no one firm can influence price. If any of them try
to raise their prices above their competitors’ prices, their customers simply switch and buy their competitors’
products.
Monopolies are at the other end of the market spectrum. In a pure monopoly, there is only one firm that
services the entire market. A pure monopolist can influence price by varying its level of output until it reaches
the level of output that results in the highest level of profit for the firm. Read the following article to learning
more about the competitive model:
Strategic Planning | How Competitive Forces Shape Strategy
After reviewing your text, in addition to the information above, please respond to the following two questions:
What advantages do monopolies have for the economy?
What disadvantages do monopolies have for the economy?
Sample Solution