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Distinguish between perfect competition and monopolistic competition.

Answer» <html><body><p></p>Solution :~Perfect Competition: The product is homogeneous, i.e. it is identical in all respects <a href="https://interviewquestions.tuteehub.com/tag/like-1073845" style="font-weight:bold;" target="_blank" title="Click to know more about LIKE">LIKE</a> size, shape, quality, etc.Monopolistic Competition: The product is differentiated on the <a href="https://interviewquestions.tuteehub.com/tag/basis-893664" style="font-weight:bold;" target="_blank" title="Click to know more about BASIS">BASIS</a> of brand, size, color, shape,etc.~Perfect Competition: No selling costs are incurred as buyers and sellers have perfect <a href="https://interviewquestions.tuteehub.com/tag/knowledge-25694" style="font-weight:bold;" target="_blank" title="Click to know more about KNOWLEDGE">KNOWLEDGE</a> about market conditions.Monopolistic Competition: Heavy selling costs are incurred on sales promotion due to lack of perfect knowledge among buyers and sellers.~Perfect Competition: Firm is a price taker as price is determined by the industry.Monopolistic Competition: Firm has partial control over price due to product differentiation.~Perfect Competition: Buyers and sellers have perfect knowledge about market conditions.Monopolistic Competition: Buyers and sellers do not have perfect knowledge due to product differentiation and selling costs incurred by sellers.~Perfect Competition: Demand curve is perfectly <a href="https://interviewquestions.tuteehub.com/tag/elastic-967540" style="font-weight:bold;" target="_blank" title="Click to know more about ELASTIC">ELASTIC</a> as price <a href="https://interviewquestions.tuteehub.com/tag/remains-621920" style="font-weight:bold;" target="_blank" title="Click to know more about REMAINS">REMAINS</a> the same at all levels of output.Monopolistic Competition: Demand curve slopes downwards as more output can be sold only at less price.</body></html>


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