Answer to Question #67735 in Microeconomics for Mohammed

Question

Using relevant examples differentiate between monopoly and monopolistic competition

Answer 1

A monopolistic market is an economic market structure that exists when there is only one supplier of a particular good or service. On the other hand, monopolistic competition involves many suppliers that distribute products that are differentiable.
In a monopolistic market, there is a single seller that produces and supplies a good or a service and has total market control. In this type of market, there are high barriers to entry; the monopolist poses obstacles for potential entrants, such as limit pricing.
On the other hand, in monopolistic competition, there are many producers and consumers in the marketplace. In monopolistic competition, all firms only have a degree of market control, whereas a monopolist in a monopolistic market has total control of the market. Unlike a monopolistic market, monopolistic competition offers very few barriers to entry. All firms are able to enter into a market if they feel the profits are attractive enough.