ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Hence, monopolistic competition refers to the market structure in which there are many producers producing goods which are close substitutes for one another.

Detailed explanation-2: -Since in Monopolistic Competition, products are close substitutes of each other, they have high positive cross-elasticities. The market for the product of one firm is not separate from the markets of its rival firms.

Detailed explanation-3: -In a monopolistic competition, the market deals is differentiated products which are close substitutes of each other due to which a monopolist is only able to maximize it’s profit through other promoting techniques.

Detailed explanation-4: -Monopolistic competition exists between a monopoly and perfect competition, combines elements of each, and includes companies with similar, but not identical, product offerings. Restaurants, hair salons, household items, and clothing are examples of industries with monopolistic competition.