Question

Give an example of monopolistic industry and describe its major features.

Answer 1

Toothpaste under Consumer Goods & Fmcg is an example for monopolistic industry

The Characteristic features are:
1. Large number of sellers: In this industry more number of sellers would be present because of open competition. So there would be more firms selling toothpaste
2. Product differentiation: Products are differentiated with respect to colour, size, shape, flavour through which it would help to maintain unique product identity. So toothpastes are differentiated with respect to flavour, colour and size.
3. Costs: As the products are differentiated costs too would differ from each other
4. Easy of entry and exit: The entry and exit would be easy compared to other industries  
5. Pricing decisions: Because of the product differentiation, the firms have partial control over prices
6. Profit: Each firm makes different profit because of product differentiation.