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Question
Discuss any four differences between Monopoly and Monopolistic Competition.
Distinguish Between
Solution
- Number of sellers: There is only one seller in a monopoly market, whereas there are many vendors in a monopolistic competitive market.
- Nature of product: There are no near-equivalents in a monopoly market, whereas vendors sell differentiated products in a monopolistic market.
- Nature of entry and exit: There is discrimination, closed entrance or restricted entry in a monopoly market, whereas there is free entry and free exit in a monopolistic competition market.
- Demand curve: In a monopoly market, a firm's demand curve is negatively sloping yet less elastic because there are no near replacements. In monopolistic competition, the demand curve is more elastic because items are close substitutes.
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Features of Monopolistic Competition
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