ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -MONOPOLISTIC COMPETITION-is the market structure that has all the conditions of a perfect competition EXCEPT for identical products. By making its product a little different, the monopolistic competitor tries to attract more customers and monopolize a small portion of the market. Easy entry, easy exit.

Detailed explanation-2: -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.

Detailed explanation-3: -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-4: -Imperfect competition-market structures where all conditions of pure competition are not met. Monopolistic competition-market structure that has all the conditions of the perfect competition except for identical products.

Detailed explanation-5: -Three conditions characterize a monopolistically competitive market. First, the market has many firms, none of which is large. Second, there is free entry and exit into the market; there are no barriers to entry or exit. Third, each firm in the market produces a differentiated product.