Similarities between perfect competition and monopoly:
The major similarities between perfect competition and monopoly can be highlighted as follows:
Under both market structure, the objective of the firm is to maximize the profit.
2. Equilibrium condition:
Under both market structure, the condition of equilibrium is the same. In both markets, MR and MC should be equal and MC must intersect MR from below.
3. The shape of AC and MC:
Due to the operation of the law of variable proportion, AC and MC curves under both market structures are ‘U’ shaped.
4. State of profit in the short run:
In the short run, under both market structures, there are possibilities of earning an abnormal profit, normal profit and bearing loss as well.
5. The number of buyers:
In both markets, there are a large number of buyers.