Discuss four differences between perfect competition and monopolistic competition.

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BhratJha · Answer 1 · 2020-06-27T06:45:06+0000

Perfect Competition	Monopolistic Competition
(i) Large number of sellers.	(i) Fairly large number of sellers.
(ii) The product is homogenous in nature.	(ii) The product is heterogeneous (differentiated) in nature.
(iii) The buyers have perfect knowledge about the product.	(iii) The buyers have some knowledge about the product.
(iv) There is no market power.	(iv) There is slight market power.
(v) The sellers are a price taker.	(v) The sellers are price maker.
(vi) Selling and advertisement costs do not exist.	(vi) Selling and advertisement costs exist.
(vii) Here, firms earn only normal profits in the long run.	(vii) Here, the firms earn supernormal profits in the long run.