Question

I need a detailed answer please!

Explain any differences in price in terms of the advantages offered by the store/business offering the higher priced item. (Keep in mind all of the differences that distinguish monopolistically competitive firms.)

Answer 1

as we know monopolistically competitive firms are competitive in nature in the sense that there is free entry and free exit in the market and the there are large no. of buyers and sellers in the market. to make there product different from there rival firms they use many non price competitive methods like packaging, advertisement, availability, accessbility, inclusiveness etc. those brand who offor a higher price for there product they definitely have to justify the product according to its price. they take into consideration consumer preferences, ease of using and better effect from others for which they ask more price from the consumer. for example suppose a body lotion company X charges higher price for the product even if there are presence of high competition in the market then the company must make the packaging of the product very attractive and the claims of the product must take into consideration the demand of the consumers and the versatality of the product is another good point for which the monopolistically competitive firm charges higher price.