BACHELOR OF BUSINESS ADMINISTRATION

Detailed explanation-1: -There is little differentiation between each of their products, as they use the same recipe, and they each sell them at an equal price. At the same time, sellers are few and free to participate in the market without any barrier.

Detailed explanation-2: -The statement mentioned is false. Product differentiation is introducing new products to reach a wider range of customers. It makes the product unique for the targeted audience.

Detailed explanation-3: -In other words, the product of each and every firm in a perfectly competitive market is a perfect substitute to others’ products in terms of quantity, quality, colour, size, features, etc. Therefore, product differentiation is not possible under perfect competition.

Detailed explanation-4: -In the perfect or pure competition market, there are a large number of firms each producing the same product (as called a standardized or homogeneous product).

Detailed explanation-5: -Monopolistic competition is a market structure where there are large number of sellers selling differentiated products. There is also no barriers to entry. Every body can fix the price as per their choice. Hence, product differentiation is a feature of monopolistic competition.