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Questions
Explain any two similarities between a perfect market and a monopolistically competitive market.
State one similarity between monopolistic competition and perfect competition.
State two similarities between the following:
Perfect competition and monopolistic competition.
Explain two similarities between a Perfect market and an Imperfect market.
Answer in Brief
Solution
Some characteristics of the perfectly competitive market are also present in the monopolistic competition. These characteristic are:
- In both the markets, the number of buyers and sellers is large.
- There are no restrictions on the entry into or exit of firms from the market.
- In both the markets the principal goal of a firm is to maximize its profit.
- Each firm earns only normal profit in the long run.
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Notes
Students should refer to the answer according to their questions.
Similarities Between Monopolistic Competition and Perfect Competition
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Chapter 5: Nature and Structure of Markets - QUESTIONS [Page 139]
