This is called price discrimination when it occurs for reasons unrelated to costs. If these two conditions are hold, the price discriminator will sell the good at a higher price to the group with the lower elasticity of demand. 3- Easy entry or exit exists in the long run. By services provided by the seller's 3-By the physical quality of the good. By the subjective image formed by consumers about the good.
Monopolistic competition is in between monopoly and perfect competition.
Each firm faces a downward-sloping demand curve, yet entry occurs in the long run. Because of this free entry and exit, long-run economic profit do not exist. Monopolistic competition, like perfect competition, is characterized by many buyers and sellers and by the free entry and exit of firms. Therefore, like monopoly, the monopolistic competition will price its product above its marginal cost of production. Whereas, in the monopolistic competition, a firm faces zero profit in the long-run at output Q where demand is tangent to average total cost.