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2) Fairly large number of buyers : In this demand for its product and thus increase
market there are fairly large number of the volume of sales. It includes expenditure
buyers. Consequently, no single buyer on advertisements, readio and television
can influence the price of the product by broadcasts, hoardings, exhibitions, window
changing his individual demand. display, free gifts, free samples etc.
3) Product differentiation : Product 6) Close substitutes : In monopolistic
differentiation is the main feature of competition, goods have close substitutes to
monopolistic competition. In this market, each other. For example, different brands of
there are many firms producing a particular soaps, toothpastes etc.
product, but the product of each firm is in 7) Concept of group : Under monopolistic
some way differentiated from the product competition, Chamberlin introduced the
of every other firm in the market. This is concept of ‘Group’ in place of industry.
known as product differentiation. Product Industry means the number of firms
differentiation may take the form of brand producing identical products. A ‘Group’
names, trade marks, peculiarity of package means a number of firms producing
or container, shape, quality, cover, design, differentiated products which are closely
colour etc. This means that the product of related. For example, group of firms
a firm may find close substitutes and its producing medicines, automobiles etc.
cross elasticity of demand is very high. For
example, mobile handsets, cold drinks etc. Find out :
4) Free entry and exit : Under monopolistic Close substitutes for the following
competition there is freedom of entry and products.
exit, that is new firms are free to enter the Products Substitutes
market if there is profit. Similarly, they can 1) Gemini Oil
leave the market, if they find it difficult to 2) Colgate Toothpaste
survive. 3) Red Label Tea
5) Selling Cost : Selling cost are peculiar to 4) Bru Caffee
monopolistic competition only. It refers to 5) Activa Two-wheeler
the cost incurred by the firm to create more
EXERCISE
Q. 1. A) Choose the correct option : Options :1) a and b 2) b and c
1) In economic sense, market includes following 3) a, b and c 4) only d
activities 2) Classification of markets on the basis of place
a) The place where goods are sold and a) Local market, National market, International
purchased. market
b) An arrangement through which buyers and b) Very short period market, Local market,
sellers come in close contact with each other National market.
directly or indirectly. c) Short period market, National market,
c) A shop where goods are sold. International market.
d) Local market, National market, Short period
d) All of the above.
market.
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