ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Non-price competition: In monopolistic competition, sellers compete on factors other than price. These factors include aggressive advertising, product development, better distribution, after sale services, etc. Sellers don’t cut the price of their products but incur high costs for the promotion of their goods.

Detailed explanation-2: -In monopolistic competition, supply and demand forces do not dictate pricing. Firms are selling similar, yet distinct products, so firms determine the pricing.

Detailed explanation-3: -Answer and Explanation: Monopolistic competition prefers non-price competition to price competition because: 1. Price competition between different monopolistic firms could lead to a price war where all the firms suffer losses.

Detailed explanation-4: -In a perfectly competitive market, each firm is a price taker, meaning that it has no control over the price. If it tries to raise its price, it loses all its consumers to other firms.