Perfect competition & monopoly

Perfect Competition.

Private choices. An example of how an ideal capitalist economy would work is an arrangement called perfect competition, also known as pure competition. In perfect competition, privately owned businesses, driven by a desire for profits, decide what goods or services to produce, how much to produce, and what methods to employ in production. These choices determine how much labor and capital a business will need. In other words, private firms "supply" goods and services and "demand" labor and capital.

For an example that gets very close to perfect competition **** A STOCK EXCHANGE***

Monopoly.

Monopoly and competition are two kinds of business conditions. In a monopoly, one company or a cooperating group of companies controls the supply of a product or service for which there is no close substitute. In competition, a number of rival firms compete to sell similar goods or services to buyers.

The extent of rivalry between sellers, rather than the number of sellers in a market, determines whether there will be monopoly or competition. In some industries that have only a few sellers, those companies compete vigorously. Each firm tries to offer a better or cheaper product. Other industries have many sellers, but the companies act together as a monopoly would.