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Distinguish Between Perfect Competition and Monopolistic Competition on the Basis of Following : (A) Number of Sellers - Economics

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Distinguish Between

Distinguish between perfect competition and monopolistic competition on the basis of the following:
(a) Number of sellers
(b) Nature of product
(c) Selling cost

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Solution

The difference between perfect competition and monopolistic competition is given as follows:

Basis Perfect Competition Monopolistic Competition
Number of Sellers Under Perfect Competition market, there exist a large number of sellers for a particular commodity. Under the Monopolistic Competition market, there exists a large number of sellers for a commodity.
Nature of Product Firms under Perfect Competition, sell homogeneous products that are perfect substitutes of each other. Firms under this market structure produce similar yet differentiated products that are 'close' substitutes of each other.
Selling Cost No selling cost is required. The selling cost is very significant.
Concept: Main Market Forms
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