1. Product differentiation is the key element in monopolistic competition. Under monopolistic competition firms produce differentiated products. The products produced by different firms are similar but not identical. They are substitutes for each other, but not perfect substitutes. These products are not homogeneous, but they are not altogether different as well. They are similar enough to be regarded as same commodity, but are sufficiently different so that consumers tend to regard them different from each other.
2. When the price level increases at a very slow rate, say at the rate of only 2% to 2.5% per annum, it is called creeping inflation. This type of inflation is not of much concern so it is not essential for economic growth.
