Economics 1 Marks Question

Monopolistic competition.

Both AR and MR curves slope downwards.

Firms produce differentiated products.

Under Perfect competition, there is no need of selling costs because the product sold is homogeneous.

A price maker firm is one to fix the price itself because of its monopoly power.

Demand schedule is a table showing prices and the quantities demanded at each price.

Under monopoly, there are restrictions on the entry of new firms.

It is called monopolistic competition.

Under monopolistic competition, there is product differentiation.

Monopoly.

1. Product differentiation is created by artificial differences such as change in colour, fragrance, certain features etc.
2. But as such all the products are close substitutes to each other.
3. This feature of product differentiation results in the downward sloping demand curve because of which prices tend to be more and hence the consumers suffer.

Oligopoly market best describes the market structure of toothpaste industry.

Under Monopoly, there are no close substitutes of a product.

Product differentiation refers to differentiating the products on the basis of brand, size, colour, shape, etc.

Monopoly.

Monopoly refers to a market situation in which there is a single seller and there are no close substitutes available of the commodity sold by the monopolist.

Oligopoly is a market situation in which an industry has only a few firms (or few large firms producing most of its output) mutually dependent for taking decisions about price and output.

Perfect competition.

Product differentiation separates monopolistic competition from perfect competition.

If in an oligopoly market firms produce homogeneous products, it is called perfect oligopoly.

Demand curve under monopoly is less elastic as compared to the demand curve under monopolistic competition due to absence of close substitutes in monopoly.

1. Large number of buyers & sellers.
2. Differentiated product.
3. Free entry and exit of firms.

It refers to a market situation in which there are many firms which sell closely related but differentiated products.

1. There are only a few firms or a few large firms.
2. There are barriers to the entry of firms.
3. There is interdependence of firms.
4. There is non-price competition.

It is a market in which there is single seller of the commodity in the market.

There should be an approach on the part of the Monopoly Firm to fix lower prices for poor people and backward areas for its product.

Monopolistic competition refers to a market situation in which there are large number of buyers and sellers, selling differentiated product.

If in an oligopoly market the firms produce differentiated products, it is called imperfect oligopoly.

In this market form, there are a large number of buyers and sellers.

MR is addition to TR on account of selling or producing one more unit of output.

One firm.

Oligopoly refers to a market situation in which there are few sellers.

1. Patent rights encourage discovery and invention of new product and technique.
2. Public monopolies (like railways, etc) protect the rights and interest of the public and saves them from exploitation.

Refute: MR and AR will be equal only for a perfectly competitive firm, because it is faced with a horizontal straight line demand curve. Under all other market conditions MR will always be less than AR.

When there are only two firms producing a product, it is called duopoly. Under duopoly it is assumed that the product sold by the two firms is homogeneous and there is no substitute for it. It is a special case of oligopoly.

The features of monopolistic competition are:

1. Product differentiation.
2. Downward sloping AR and MR curves.

1. Manufacturers of colour television such as Samsung, LG, Sony, Philips, Onida
2. Producers of various brands of bathing soap such as Lux, Breeze, Palmolive, Hamam, Jai, Godrej, Dove etc.

The features of monopolistic competition, which are competitive in nature are:

1. Large number of sellers.
2. Freedom of entry and exit.

Under monopolistic competition, there is a need of selling costs because the firms produce different brands of the product.

Oligopoly is a market structure characterised by the presence of a few large firms (producing homogeneous or differentiated products) intensely competing against each other and recognising interdependence in their decision-making.