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  Existence of Large Number of firms

Existence of Large Number of firms:

Under monopolistic competition, the number of firms generating a commodity will be very big. The word ‘very large’ symbolizes that contribution of each firm towards the net demand of the product is small. Each and every firm will act independently on the basis of product discrimination and each firm finds out its price-output policies. Any action of the individual firm in rising or reducing the output will have little or no effect on other firms.

 

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