ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Monopolistic competition occurs when many companies offer products that are similar but not identical. Firms in monopolistic competition differentiate their products through pricing and marketing strategies.

Detailed explanation-2: -Like pure competition, monopolistic competition is a market structure referring to a large number of small firms competing against each other. However, firms in monopolistic competition sell similar but highly differentiated products.

Detailed explanation-3: -Monopolistic competition refers to a market where many firms sell differentiated products. Differentiated products can arise from characteristics of the good or service, location from which the product is sold, intangible aspects of the product, and perceptions of the product.

Detailed explanation-4: -In monopolistic competition, we still have many sellers (as we had under perfect competition). Now, however, they don’t sell identical products. Instead, they sell differentiated products-products that differ somewhat, or are perceived to differ, even though they serve a similar purpose.

Detailed explanation-5: -Monopolistic competition is similar to perfect competition in that in both of these market structures many firms make up the industry and entry and exit are fairly easy.