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Question
Give reason or explain:
Selling cost is incurred by a firm in Monopolistic competition.
Solution
The products sold under monopolistic competition are differentiated from each other. The products of the monopolistic firm is differentiated on the basis of certain characteristics as colour, shape size, etc. Such product differentiation further leads to selling costs by the firms. Through such expenses as advertisement, a particular monopolistic firm tries to convince the consumers by distinguishing its product on qualitative basis from its substitutes and thereby, attract greater number of customers to it.
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Group B
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Monopolistic Competition
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Perfect Competition
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PASSAGE
In India, markets for automobiles, cement, steel, aluminium, etc, are the examples of oligopolistic market. In all these markets, there are few firms for each particular product. Duopoly is a special case of oligopoly, in which there are exactly two sellers. Under duopoly, it is assumed that the product sold by the two firms is homogeneous and there is no substitute for it. Examples where two companies control a large proportion of a market are: (i) Pepsi and Coca-Cola in the soft drink market; (ii) Airbus and Boeing in the commercial large jet aircraft market.
Operating systems for smart phones and computers provide excellent examples of oligopolies in big tech. Apple iOS and Google Android dominate smart phone operating systems. Computer operating systems are overshadowed by Apple and Microsoft Windows.
- Give examples of oligopolistic market in India (1 mark)
- Explain the concept of duopoly with a suitable example from the passage (1 mark)
- Express your personal opinion based on the above information (2 marks)
In which one of the following types of markets are Average Revenue curve and Market Demand curve the same?
