What are the salient features of monopolistic competition?
- Large number of buyers and sellers
- Free entry and exist of firms
- Product differentiation or branding
- There are many suppliers of the different brands
- No firm has full control over the price
- Firms deal in close substitutes performing the same purpose e.g. bathing soaps
- Firms operate at excess capacity in the long run
- Firms face a downward slopping demand curve which is more elastic that of a monopoly.
- There is persuasive advertisement
- There is no government intervention in fixing prices of commodities produced.
- Lack of Perfect Knowledge
- Less Mobility
- More Elastic Demand.
- Companies compete based on product quality, price, and how the product is marketed.
CATEGORIES Economics
TAGS Dr. Bbosa Science
