BUSINESS ADMINISTRATION
BUSINESS ENVIRONMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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In perfect competition there are no barriers to entry, but there are strong barriers in monopolistic competition.
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In perfect competition there are many firms, but in monopolistic competition there are only a few firms.
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In perfect competition the firms all sell products that are exactly the same, but in monopolistic competition each firm sells a slightly differentiated product.
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In perfect competition there are few consumers, but in monopolistic competition there are many consumers.
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Detailed explanation-1: -Which of the following statements correctly identifies a difference between perfect competition and monopolistic competition? In perfect competition there are no barriers to entry, but there are strong barriers in monopolistic competition.
Detailed explanation-2: -In perfect competition, firms produce identical goods, while in monopolistic competition, firms produce slightly different goods.
Detailed explanation-3: -In perfect competition, the demand and supply forces determine the price for the whole industry and every firm sells its product at that price. In monopolistic competition, every firm offers products at its own price. Entry and Exit are comparatively easy in perfect competition than in monopolistic competition.
Detailed explanation-4: -The principal difference between these two is that in the case of perfect competition the firms are price takers, whereas in monopolistic competition the firms are price makers. Perfect competition is not realistic, it is a hypothetical situation, on the other hand, monopolistic competition is a practical scenario.
Detailed explanation-5: -A monopoly is the type of imperfect competition where a seller or producer captures the majority of the market share due to the lack of substitutes or competitors. A monopolistic competition is a type of imperfect competition where many sellers try to capture the market share by differentiating their products.