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| 1. |
Bring out the various of difference between monopoly and monopolistic competition. |
| Answer» SOLUTION :~Monopoly: There is a single seller. So, a monopolist has full CONTROL over the market.Monopolistic Competition:There are large no. of sellers. So, a firm does not have much impact on activities of other firms.~Monopoly: There are no close substitutes of the product.Monopolistic Competition: Product are differentiated on the BASIS of brand, size, colour, shape,etc.~Monopoly: There is restriction on entry and exit. So, a firm can earn abnormal profits in the long run.Monopolistic Competition: There is a freedom of entry and exit. However, only a competitive firm can enter or leave the industry.~Monopoly: Monopolist is a price-maker as firm and industry are one and the same thing.Monopolistic Competition: Firm has partial control over price due to product differentiation.~Monopoly: The downward sloping demand curve is less elastic due to absence of close substitutes.Monopolistic Competition: The downward sloping demand curve is more elastic due to presence of close substitutes.~Monopoly: Low SELLING costs are incurred.Monopolistic Competition: Heavy selling costs are incurred on sales promotion. | |