Question

1)What are the four distinguishing characteristics of monopolistic competition?

2) Discuss the conditions that must be present for a firm to price discriminate. What is price discrimination? Which consumers are affected by price discrimination?

Answer 1

Q-1 ANSWER ::

The Four Distinguishing Characteristics Of Monopolistic Competition Are Mentioned Below :

(1) In Monopolistic Competition Firm Has Full Power to decided Its Product Prices According to Their Manufacturing cost

(2) There Is No Barrier To Entery For New Firm Or Exit For Existing Firms So There for Competition Are Exist In Monopolistic Competition

(3) There No Similar Product Producer By The Firm They Produce Different Product That Is Not Exist In Market to Other Firms So Monopoly Also Established In That Competition

(4) There are Large Number Of Seller And Buyer In that Market But they Produce Differentiated Product

Q-2 Answer ::

=> To Doing Price Discrimination Firm Most Have A Control On Supply And Also They Have Ability to Resale Product From one Person To Another Person. It is Important To Make Agreement With Rival Sellers So they Don't Take Opposite Action to It.

=> Price Discrimination Occur When Seller Charge Different Price To Different Consumer For Same Product So When Some Product Demand Increased But Its Supply don't So Some Consumer Are Willing To Pay More Money for Product So Seller sell that Product At Higher Than They charge Usually It Is Called Price Discrimination.

=> The Price Discrimination Affect The Consumer Who is Willing to Pay More Money To some Product. So Its Not Harmful For Consumer Because Consumer Want to pay That Price For Goods Also Government Don't Inter fear In It.