In many U.S.

markets, producers practice product differentiation by altering the physical composition of products, using special packaging, or simply claiming to have superior products based on brand images or advertising. Toothpastes, toilet papers, computer software and operating systems are examples of differentiated products.

Some restaurants enjoy monopolistic competition because of their popularity and reputation. Demand for some specific models of automobiles outstrips the production capacity. This creates situation of monopolistic competition. Similar monopolistic situation develops for some given periods for different capital goods product from time to time. Some newspaper in some places enjoy almost monopolistic position in spite of existence of other competitors.

1.Most businesses are in monopolistic competitive markets.

2. Monopolistic firms have short-run profits. they can secure profits only if they continue to innovate, i.e. create extra value for consumers and thus keep their product differentiated from new entrants that try to copy the good.
3. Monopolistic firms have no long-run profits. 4 Monopolistic firms do not produce at lowest ATC: no productive efficiency. 5. Monopolistic firms sell products at price more than MC