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Question
State with reason whether you agree or disagree with the following statement:
Perfect Competition means Monopolistic Competition.
True or False
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Solution
I disagree with this statement.
Reason:
Perfect competition and monopolistic competition are two different market structures.
In perfect competition, there are many buyers and sellers selling homogeneous (identical) products, and firms are price takers.
In monopolistic competition, there are many sellers but they sell differentiated products, and firms have some control over price.
Therefore, perfect competition does not mean monopolistic competition.
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