Give the meaning of monopolistic competition? Give example.

1.	Give the meaning of monopolistic competition? Give example.
Answer» When the market structure has large number of firms, free entry and exit of firms and differentiated goods, then it is called monopolistic competition. For example, there is large number of soaps producing firms. But many of the soaps being produced are associated with some brand name and are distinguishable from the other companies. The consumer develops a preference for a particular brand of soap over time or becomes loyal to a particular brand like some people always prefer Mysore Sandal Soap.

Answer»

When the market structure has large number of firms, free entry and exit of firms and differentiated goods, then it is called monopolistic competition.

For example, there is large number of soaps producing firms. But many of the soaps being produced are associated with some brand name and are distinguishable from the other companies. The consumer develops a preference for a particular brand of soap over time or becomes loyal to a particular brand like some people always prefer Mysore Sandal Soap.

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