ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Monopolistic competition exists when many companies offer competing products or services that are similar, but not perfect, substitutes. The barriers to entry in a monopolistic competitive industry are low, and the decisions of any one firm do not directly affect its competitors.

Detailed explanation-2: -The restaurant industry (monopolistically competitive nationwide) provides an example of a monopolistically competitive market. In most areas, there are many firms, each is different, and entry is easy. Each product has many close substitutes sold by different firms, including other restaurants, fast-food outlets.

Detailed explanation-3: -Monsanto and ConEd are examples of monopolist companies and indicate the role of monopolies in the modern economy. Monsanto shows the dangers of allowing a company to operate with complete control over the price of its products.

Detailed explanation-4: -Product Differentiation Under monopolistic competition, firms slightly differentiate their products. For example, tea bags rely on quality and brand name to differentiate, yet under a perfectly competitive market, they would be exactly the same.

Detailed explanation-5: -Monopolistic competition is much like pure competition in that there are many suppliers and the barriers to entry are low. However, the suppliers try to achieve some price advantages by differentiating their products from other similar products.