State whether the following statement are TRUE and FALSE. 1. There is no price discrimination under Monopolistic competition.

State whether the following statement are TRUE and FALSE.


1. There is no price discrimination under Monopolistic competition.

Answer: 

1. True

In a monopolistic market there exists a large number of sellers selling differentiated products that are close substitutes of each other. Due to the presence of large number of sellers in the market none of them can follow price discrimination. This is because demand curve faced by the sellers is highly elastic. Even a slight change in the price brings about a large change in the quantity demanded. Thus, price discrimination cannot be followed.

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