Question

State two dissimilarities between Monopolistic competition and Perfect competition.

State any two differences between mono-polistic competition and perfect competition.

Explain two dissimilarities between a Perfect market and an Imperfect market.

State one difference between monopolistic competition and perfect competition.

Distinguish between perfect competition and monopolistic competition. 

Answer 1

	Basis	Monopolistic Competition	Perfect Competition
1.	Number of Sellers	There are a large number of small sellers.	Large number of small sellers.
2.	Product	Products are different but are close substitutes of one another.	Products of all sellers are homogeneous.
3.	Demand	Like monopoly, the firm under monopolistic competition also has a negatively sloping demand curve (but more elastic).	The firm here faces a perfectly elastic demand curve.
4.	Price	Firms have some control over price.	Uniform price prevails in the entire market and every firm here is a price-taker.
5.	Entry of Firms	Free entry or exit of firms into the market.	There is no restriction on the entry or exit of firms in the market.
6.	Selling Costs	Huge amount of money is spent on advertisement, etc.	No selling costs are incurred here.
7.	Practicability	It is a real market situation which we come across in our day-to-day life.	It is not seen in real life.

Answer 2

Two Dissimilarities between Perfect Market and Imperfect Market:

1. In perfect market, products are homogeneous whereas in imperfect market, products are closely differentiated.
2. In perfect competition, firms do not spend on sale promotion activities, whereas in an imperfect market, firms have to incur selling costs.