Question

Do monopolistically market typically have the optimal product? Explain

Answer 1

Monopolistic markets do not have optimal product. In a monopolistic market, each seller sells a differentiated product that may be distinct in appearance, area of sale or perceptions about the product. The distinctness of the product in the mind of the consumer is achieved through advertising and branding. In a perfectly competitive market it is not possible to distinguish between the products and each seller will have to sell the optimal product in order to remain in the market. In the monopolistic market, there is no such optimal product as each product has intangible variations that makes the customer unable to choose among products of different sellers.