Consider the difference between perfect competition and monopoly; find real-world examples of each and apply the criteria for defining markets (number of producers, the similarity of production, barriers to entry) to those markets to determine how close they fit the textbook definition.

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A monopoly refers to when a single company controls at least 25% of the market. In order for there to be a monopoly, there has to be a lack of substitutes—which means that the one company controls the market. Additionally, there has to be a high barrier to entry; this means that it is difficult for new companies to come in and compete. The company with the monopoly will also have control over the price in the market. Some companies that you might look at here are Microsoft and Apple - do either have monopolies over specific electronic products?

Perfect competition, on the other hand, is the opposite of monopoly. This means that there are a number of different players within the market. The products between companies are very similar, and no one company sets the market price. Additionally, the barrier to entry in this market is very low. Here, you might think of products in a grocery store. For example, most cereals are similarly priced and are very comparable.

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