MONOPOLISTIC COMPETITION AND FEATURES REFER PHOTOSTAT GIVEN PRICE DETERMINATION UNDER MONOPOLISTIC COMPETITION According to Prof.

. Chamberlin, the firm under monopolistic competition has to make wider range of decisions than under perfect competition. The price is determined by examining individual equilibrium and then group equilibrium. INDVIDUAL EQUILIBRIUM The equilibrium of individual firm is discussed here with reference to prices and output adjustments , assuming that the selling costs are absent. Under monopolistic competition also, firm will make maximum profit when two conditions are satisfied; 1) MC = MR and 2) MC must cut MR from below. 1) SHORT PERIOD INDIVIDUAL EQUILIBRIUM In short period , it is not necessary that all firms should have iso-classic demand curves. The elasticity of demand curve under monopolistic competition depends upon attachment of the buyers. So this itself depends upon the age of the firm. Older firms will have greater price advantage while newer firms have lesser price advantage.