Monopoly

Traditional microeconomic theory deals with two basic market types: Perfect competition and monopoly. In the case of perfect competition individual firms are assumed to be so small in comparison with the entire market that they cannot noticeably influence market price on their own; they just note the current price and react accordingly with respect to their supply. Only the supply of all the numerous firms together becomes a force on the market strong enough to determine the price in a balance with the demand of all the likewise numerous and small households.