Difference Between Monopoly And Monopoly

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The citizens of Tap are going through a change of market structures from a market of perfect competition to a monopoly. Since the transition from perfect competition to a monopoly would bring plenty of changes, the citizens should immediately recognize differences in the quality and the price of the corn. This economy features two different types of citizens in a market; farmers, who are the producers, and buyers, who are the consumers. In a market of perfect competition, competition between corn farmers would be high. When there are several producers of the same product in a market of perfect competition, the producers must lower prices to stay in the market, for consumers will seek out the cheapest cost. This is especially true since the producers are all selling the exact product as each other. Once these producers decide to start selling to the Mega Company, they no longer have the power…show more content…
In this new market, perfect competition can no longer exist because Mega Company owns all the production in the market. This allows Mega Company to become the price maker and take away the options from the consumers. While the company can ensure the quality and packaging of the corn, the consumers are now helpless in deciding the price and must follow whatever price the monopoly sets. Since Mega Company is buying all the product, a new company is unable to enter the market and change the equilibrium of the price. Mega Company would also be in the situation to utilize the profit maximizing behavior available to monopolies. This means that since Mega Company decides where the equilibrium is on the demand and supply curve as they hold the power to set the price in the market. In this market structure, Mega Company is the one that comes out on top since it will make all the profits with no one else able to

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