What are the different assumptions of a perfectly competitive market and a market with monopolistic competition?

The main characteristics of a perfectly competitive market include: (1) a very large number of small, price-taking firm; (2) a homogenous product is being sold; (3) there are no barriers to entry or exit; and (4) there is perfect knowledge of information.
On the other hand, the main assumptions of a market with monopolistic competition are: (1) there is a large number of small firms who have relatively free entry and exit into the market; and (2) there is product differentiation, as in there are physical/quality differences, location, services, and product image which could be differentiated between firms.

ZD
Answered by Zeina D. Economics tutor

3762 Views

See similar Economics IB tutors

Related Economics IB answers

All answers ▸

Outline the differences between the GDP, real GDP and green GDP.


How can I achieve a top grade?


Using diagrams and an example, define what is meant by the term "negative externality of consumption". List two policies that can be used to correct for this market failure.


If monopolies are so inefficient, why do they still exist?


We're here to help

contact us iconContact ustelephone icon+44 (0) 203 773 6020
Facebook logoInstagram logoLinkedIn logo

© MyTutorWeb Ltd 2013–2025

Terms & Conditions|Privacy Policy
Cookie Preferences