ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -In monopolistic competition there are many producers and consumers, with the market composed of a large number of small firms. These firms produce a differentiated product or service, with the opportunity for them to build brand loyalty among their custom-ers.

Detailed explanation-2: -Product differentiation is the key feature of monopolistic competition, where products are marketed by quality or brand. Demand is highly elastic, and any change in pricing can cause demand to shift from one competitor to another.

Detailed explanation-3: -Oligopolistic firms often enjoy high levels of brand loyalty and a secure share of the market. This means it is difficult to take market share from other firms, leading to a lack of incentive to innovate.

Detailed explanation-4: -Advertising and branding: Firms in monopolistic competition often use advertising and branding to differentiate their products and build brand loyalty. This can result in increased awareness of different products, which can be beneficial to consumers who want to make informed choices.