The major dissimilarities between perfect competition and monopoly are as follows:
- Nature of product: Under perfect competition, products are homogenous while it is unique under monopoly.
- A number of the firm: Under perfect competition, there are large numbers of the firm under an industry. But in case of monopoly, there is only one firm under industry.
- Entry and exit condition: Firms have freedom to enter into or, exist from the industry under perfect competition. In the case of monopoly, entry is a complete barrier
- State of profit: In the long run, the firm can earn only a normal profit under perfect competition. But in case of monopoly, a firm can enjoy supernormal profit even in the long run.
- Price: Monopolists can restrict output and thus, raise the price, which is not possible under perfect competition. Hence, monopoly price is generally higher than the price under perfect competition.
- Demand curve: Firm under perfect competition faces a perfectly elastic demand curve ( AR=MR=P), implying that the firm cannot change the prevailing market price as they are simply the price taker. But monopolist faces a downward-sloping demand curve, which implies that price has to be reduced so as to sell more as monopolist is a price maker.
- Capacity utilization: Under Perfect competition, it is necessary for the firm to operate at the minimum point of the LAC curve, implying that plant size is optimally utilized. For a monopolist, It is necessary to operate at the minimum point of the LAC curve. Plant size is over-utilized, underutilized or optimally utilized depending on market condition.