Question

State with reason whether you agree or disagree with the following statement:

There is product differentiation under monopolistic competition.

Answer 1

I agree with the given statement.

Reason:

1. In monopolistic competition, each product is different from other products in some way or the other.
2. The difference could be in the form of brand name, trademarks, shape, quality, ingredients used, packaging, design, colour, smell, etc
3. The products are different but they are close substitutes to each other, i.e., cross elasticity of demand is very high.

The above points show that there is product differentiation under monopolistic competition