Question

In this chapter, we discuss the monopolistic competition. What's the primary requirement for a market to be competitive? How does competition affect the following?  

a) the cost efficiency of producers

b) the quality of products

c) the discovery and development of new products

Can you present an example from your professional or other experience?

Answer 1

What's the primary requirement for a market to be competitive?

Ans : More than one firm in the market. As the number of firms increase so does the competitiveness

How does competition affect the following?
a) the cost efficiency of producers

Ans: Cost efficincy imporves as decreaseing costs increases competitiveness and helps increase profits

b) the quality of products
Ans: Helps in differentiating. This helps firms to segment buyers into different categories and meet their specific needs. This is especially true in monopolistic competition

c) the discovery and development of new products
Faster and greater supply of goods ,which reduces the cost to customers for acquiring the product.

Can you present an example from your professional or other experience?

Ans: Like in the smartphone industry. As Apple launched their Apple iphone other firms started making similar smartphones which helped the industry grow and innovate faster.

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