Question

Discuss with your group members the differences between Monopoly and Monopolistic Competition. Provide examples of each type of market structure.

Answer 1

Monopoly is a market with only one seller. The seller has no competition in the market unlike monopolistic competition. The monopolistically competitive firm exists in a market where a large no of buyers and sellers exist. The sellers in this market sells differentiated products. The products are differentiated on the basis of size, quality, brand etc. The monopoly on the other hand sells the product which has no close substitute available. The monopolistic ally competitive firm has some control over price where as the monopolist has full control over price.

The soaps of different brands may be considered as operating under monopolistic competition.

A product which is sold by only one seller will be taken under monopoly.