Question

State the similarities between monopolistic competition and monopoly. 

State two similarities between the following:

Monopoly and monopolistic competition.

Answer 1

Since monopolistic competition is a blending of monopoly and competitive market conditions, so some features of the monopoly market are also present in monopolistic competition. These are:

1. Each firm has some monopoly power in this market.
2. Each firm faces negatively sloped demand curve or AR curve.