Monopoly

Features: 1 A single firm operates in the industry 2 Entry is blocked 3 No product differentiation 4 Firm faces downward sloping demand curve 5 Firms objective is to maximize profit 6 Both short run and long run profit maximizing price and output are the same

Profit maximizing conditions are, F.O.C. : MR = MC S.O.C. : Slope of MR < Slope of MC

Shaded area : profit of the firm

Monopolistic Competition
Features: Many small buyers and sellers Free entry and exit Slight product differentiation; goods are close substitutes but not perfect substitutes The firm faces slightly downward sloping demand curve

Short-run: Positive Profit

Long-run: Zero Profit