State any two differences between Monopolistic competition and Perfect competition.
State any two differences between Monopolistic competition and Perfect competition.
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| Basis | Monopolistic Competition | Perfect Competition | |
| (i) | Number of seller | The number of sellers is fairly large. | It is very large. |
| (ii) | Selling cost | In order to sell their brand, firms incur heavy selling and advertisement costs. | There are no selling costs. |
| (iii) | Product | Products are differentiated. | Products are homogeneous. |
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| Basis | Perfect Competition | Monopolistic Competition |
| Nature of Product | The Product is homogeneous,i.s. , it is identical in all respects like size,shape, quality, etc. | The product is differentiated on the basis of brand, size, colour, shapes, etc. |
| Selling Cost | No need for selling cost as firms products homogeneous products. | Selling costs are incurred because firms produces differentiated products. |
| Price | Firm is a price-taker. | Firms has partial control over price due to product differentiation. |
| Demand Curve | Demand curve is perfectly elastic as price remains the same at all levels of output. | Demand curve slopes downwards as more output can be sold at less price. |
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