Monopoly is considered as an economics term which defines the situation which has only single supplier of specific product in the market. A monopoly exists when a single firm holds more than 25% of the market share (E. S. Mason, 1937).

Kinds of monopolies

Monopolies could be divided into different forms due to following reasons:

· If the firm is owing the possession of scarce resources, it has the monopoly power for this resource. For example, Microsoft has possession of window operating system. Microsoft is the only firm who have these resources.

· In some cases, government grants monopoly status to some companies such as Pakistan Post office, which is confirmed by the government to do some specific task which could only perform by the post office.

· The producer may have copyrights for some ideas and tasks, which could be for some tangible or intangible services.

Characteristics of monopoly

Firms having monopolies could earn supernormal profit in the long run. As we know that the profit maximization is based on other firms that are considered when MC = MR. The level of profit maximization always depends on the competition in the market, which does not exist in the monopoly as there is zero competition in monopoly. At the point where profit maximization is maximum is MC = MR while Q is quantity of the commodity, and P is price for that commodity. When the AR is above than ATC, the firm will earn supernormal profit. It is assumed that there is no near substitute for the product which is produced by the monopolistic firm.

Reference: https://www.economicsonline.co.uk/Business%20economics%20graphs/Super-normal-profits.png

There may be some advantages and disadvantages of monopoly describe below:

· Economies of scale

· Increase exports by penetrating the market for foreigners.

· Higher profit margins

· No entry of the new entry

· Cost reduction

As concerned with the disadvantages of the monopoly:

· Restriction of the output in the market

· Higher prices as compared to a competitive market

· Deficiency in consumer surplus

· Restrictions of consumers

Perfect competition of Monopoly, Perfect Competition and Elasticity

Perfect competition is a market situation where many firms are offering homogeneous products as firms have freedom of entry and exit in the market. Firms will earn normal profit, and prices are remain low due to perfect competition (L. Makowski & Ostroy, 2001).

Characteristics of perfect competition of Monopoly, Perfect Competition and Elasticity

· A large number of buyer and seller

· Free entry and exit

· Homogeneous products

· Perfect information about the market

Reference: https://www.economicshelp.org/wp-content/uploads/2011/09/perfect-competition-600x332.png

If the firms are making a supernormal profit in the market they will attract the industry with fall in the prices, but if the firms are in loss, they will increase the prices in the market. The characteristics of perfect competition are rare, but it is more significant as compared to other situations in the market. Perfect competition situation describes that if there is rise in the demand, the prices will grow up, and demand curve will shift upward, and this situation will be of supernormal profit. This situation will attract new firms to enter the market with lower prices to get back equilibrium positions in the market. Examples of perfect competition are a foreign exchange, the market, the agriculture market, and network industry.

The efficiency of perfect competition

· Firms will work efficiently as P = MC

· AC curve will be at a lower point

· Firms have to efficient enough otherwise it will vanish from the market

· Firms will get benefits of efficiencies of scale

Elasticity of Monopoly, Perfect Competition and Elasticity

Elasticity is a concept in economics which is applied in different situations. The supply deals with the demand and supplies analysis of the different variables. Elasticity explains the key information about the strength and weaknesses of the products and their relationship with the variables (B. Suleiman, Sakr, Jeffery, & Liu, 2012). Elasticity is measured as:

E = ^%Δy /_%Δx

Types of elasticity of Monopoly, Perfect Competition and Elasticity

There are different types of elasticity which measure the relationship of the economic variables between them described below:

i. Price elasticity of supply: is the degree of responsiveness which measures the quantity of supplied commodities within the change in price.

ii. Price elasticity of demand: is the degree of responsiveness, which measures the quantity of demanded commodities within the change in price.

iii. Cross elasticity of the demand: is termed as a measurement that measures the quantity demanded of one commodity to change in the price of another commodity.

iv. Income elasticity of demand: is measurement, which measures the change in the quantity demanded to a change in the income of the consumer.

Elasticity is considered an important concept in economics as it mostly used in economics to describe the relationship between different economic variables. Furthermore, it deals with the major factors of the demand and supply in the market, which are considered as major factors of the economy, and all the factors of production are consumed within the specific ratio, which is definable.

Conclusion of Monopoly, Perfect Competition and Elasticity

Economics deals with different terminologies in the country, which is being implemented in the country. As concern with the economics terms discussed above monopoly, perfect competition, and elasticity, the market could not survive in the different business terminologies without examining the measures enforced in the market. Monopoly is an economics term which defines the situation which have only single supplier of specific product in the market while Perfect competition is a market situation where many firms are offering homogeneous products as firms has freedom of entry and exit in the market and elasticity is the degree which is used to measure these terms in the market.

References of Monopoly, Perfect Competition and Elasticity

B. Suleiman, Sakr, S., Jeffery, R., & Liu, A. (2012). On understanding the economics and elasticity challenges of deploying business applications on public cloud infrastructure. Journal of Internet Services and Applications, 3(2), 173-193.

E. S. Mason. (1937). Monopoly in law and economics. Yale LJ, 47, 34.

L. Makowski, & Ostroy, J. M. (2001). Perfect Competition and the Creativity of the Market. Journal of Economic Literature, 39(2), 479-535.