What do you understand by the concept of selling cost under monopolistic competition. Give its implication.
give the implication
ppl
Dear Student,
Selling cost: Selling cost is the cost that is incurred by the sellers to attract their customers or to change preference of customers towards their product.It is the cost that is incurred by the sellers to persuade customers to buy their product. For example: advertising cost , sales promotion etc.
Under monopolistic competition, there are many sellers selling differentiated product having close substitutes. So, sellers have to incur heavy selling costs to increase their market share.
Implications of heavy selling cost under monopolistic market:
(i) Competition: In monopolistic competition there is a large amount of competition as products offered by them have close substitutes.So they have to incur large amount of selling cost.
(ii) Close substitutes: Products are differentiated but have close substitutes.
(iii) Price of the product:In monopolistic market, prices of the products offered by monopolistic firms are almost same but they wanted to increase their market share by incurring selling costs.
Hope this information will clear your doubts on this topic.
If you have any more doubts just ask on the forum and our experts will try to help you out as soon as possible.
Regards
Selling cost: Selling cost is the cost that is incurred by the sellers to attract their customers or to change preference of customers towards their product.It is the cost that is incurred by the sellers to persuade customers to buy their product. For example: advertising cost , sales promotion etc.
Under monopolistic competition, there are many sellers selling differentiated product having close substitutes. So, sellers have to incur heavy selling costs to increase their market share.
Implications of heavy selling cost under monopolistic market:
(i) Competition: In monopolistic competition there is a large amount of competition as products offered by them have close substitutes.So they have to incur large amount of selling cost.
(ii) Close substitutes: Products are differentiated but have close substitutes.
(iii) Price of the product:In monopolistic market, prices of the products offered by monopolistic firms are almost same but they wanted to increase their market share by incurring selling costs.
Hope this information will clear your doubts on this topic.
If you have any more doubts just ask on the forum and our experts will try to help you out as soon as possible.
Regards