Question

What is the difference between Monopolistic and Perfect competition? Give examples from real world in support of your answer.

Answer 1

Differences between the perfect competition and monopolstic competition are:

• Goods are differentiated in the monopolistic market and homogeneous in the perfect competitive market.
• In the perfect competition the market is both allocative and productive efficient monopolistic competition create a deadweight loss in the market
• monopolistic competitive market always have access capacity.

Examples if perfect competition are agricuture market like rice and pulses, all the goods are same, sellers have no control over the price, monopolsitic competiton is for example a coffee shop, all the shops have slightly different goods and they all have some control over their price.