This paper explains how the pricing and output decisions of a monopoly and a perfectly competitive firm differ due to the differences in the nature of their barriers to entry. What is a monopoly? A monopoly is a market where there is only one seller of a uniquely differentiated product with no close substitutes. What is a perfectly competitive firm? A perfectly competitive firm is one where there are many buyers and sellers of one homogeneous product. What are barriers to entry? Barriers to entry are obstacles or barriers that deter new firms from entering the market. There are two main types of barriers, artificial (man-made barriers) and natural (such as huge economies of scale)
After having defined the various concepts, this essay seeks to first state the assumptions of each firm before illustrating with a diagram how each firm's pricing decision is made. It would then show how differences in barriers to entry affect this important pricing decision of a monopoly and perfectly competitive firm.
What are the main strengths of this economics essay? Think about it. What are the main weaknesses of this economics essay? Think about this question also. The main good thing about this essay that makes it useful in learning economics is that it addresses the question directly, through the use of relevant, clear cut diagrams. Economics diagrams are very important to answering a question, and there should be a well developed paragraph assisting the economics diagram to do its job well.
However, perhaps this economics paper could be better developed with real life examples and other illustrations that could show the theory. While the question asks for the "relevant economic theory", and this essay has done precisely that, this economics essay could be helped further by developing the paragraphs with some real life examples. How else could this essay have been improved? Think of how you could help to make this a better essay than it already is.
Special thanks and cheers to model students SS, AG, and JC for their kind yet invaluable contributions. Special thanks to SS for his editing and vetting of this sample essay to make it even better than it was originally. Thank you for reading, and cheers.