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Non-Competitive Markets — Economics STD 12 Humanities & Commerce — Question

Rajasthan BoardEnglish MediumSTD 12 Humanities & CommerceEconomicsNon-Competitive Markets3 Marks
Question
Explain two points of distinction between monopoly and monopolistic competition.
✓

Answer

Points of distinction between monopoly and monopolistic competition:
  1. Under monopoly there is a single seller/producer of the commodity where as under monopolistic competition there are large number of sellers. So the firm under monopoly has greater influence over price then under monopolistic competition.
  2. There is freedom of entry of new firms under monopolistic competition whereas there is no such freedom under monopoly. As a result a monopolist can earn abnormal profits in the long run.
  3. Under monopolistic competition the product is heterogeneous while under monopoly there are no close substitutes of the product.
  4. The demand in a monopoly market is less elastic than the demand under monopolistic competition because under monopoly there are no close substitutes of the product.

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