The following differences are found between the two:
(a) A monopolist fixes a price at a higher level than marginal cost, whereas a perfectly competitive firm sets price equal to MC.
(b) A monopolist can make super-normal profits even in the long run, as entry of new firms to the industry is not possible under monopoly. On the other hand, a perfectly competitive firm makes only normal profits in the long run.
(c) Price is higher and output smaller under monopoly firms as compared to those under perfect competiton.
(d) Monopoly equilibrium is possible whether MC is rising, remaining constant or falling, whereas for a firm working under perfect competition, MC must be rising at the equilibrium output.
(e) Monopoly equilibrium is usually achieved below the optimum size, that is, below the output level where LAC’ is minimum.
(f) A monopolist can discriminate prices, whereas price discrimination is not possible in a perfectly competitive market.
