Prepare a note on monopolistic competition.

1.	Prepare a note on monopolistic competition.
Answer» A market structure where the number of firms is large, there is free entry and exit of firms, but the goods produced by them are not homogeneous such a market structure is called monopolistic competition. Its features are as following: 1. There are large number of buyers and sellers. 2. There is free entry and exist in long run. 3. There is product differentiation. The monopolist produces less and charges a higher price compared to perfect competition. It is found in the industry where there is large number of sellers, selling differentiated but close substitute products. Monopolistic competition in a commodity market arises due to the commodity being nonhomogeneous.

Answer»

A market structure where the number of firms is large, there is free entry and exit of firms, but the goods produced by them are not homogeneous such a market structure is called monopolistic competition.

Its features are as following:

1. There are large number of buyers and sellers.

2. There is free entry and exist in long run.

3. There is product differentiation.

The monopolist produces less and charges a higher price compared to perfect competition. It is found in the industry where there is large number of sellers, selling differentiated but close substitute products. Monopolistic competition in a commodity market arises due to the commodity being nonhomogeneous.

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