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What are the gains of trade on a monopolistic competitive market? Explain

What are the gains of trade on a monopolistic competitive market? Explain

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Meaning -Monopolistic competition is a market structure in which there are many competing producers , each producing a differentiated product, and there is free entry and exit in the long run . A monopolistically competitive firm will always prefer to make an additional sale at the going price,so it will engage in advertising to increase demand for its product and enhance its market power.

Gains of trade on a monopolistic competitive market-

1) Enhancement of Efficiency - Efficiency is increased because there are too many productive firms begin exporting.

2) Markup charges is reduced - Due to import competition mark up charges is reduced by firm to avoid competition.

3)Varieties Of import is available to consumers.

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