Answer to Question #125926 in Microeconomics for K. M Mulalo

Question

Identify any five examples of industries operating under conditions of monopolistic
competition and outline any of their salient features to justify your selection

Answer 1

Monopolistic competition is a market structure which combines elements of monopoly and competitive markets.

Features of monopolistic competition industry include;

1. There are many firms.
2. There is freedom of entry and exit.
3. Firms produce differentiated goods.
4. Firms make normal profits in the long run and may make super-normal profits in the short run.
5. Firms are allocatively and productively inefficient.

Examples of industries operating under conditions of monopolistic competition are;

1. Restaurants
2. Hairdressers
3. Clothing industry
4. Television programmes
5. Transportation industry