Advertisements
Advertisements
Question
Per unit price of electricity is higher in the Commercial sector as compared to the Domestic sector. Identify and briefly describe this phenomenon. Name the market in which it is applicable.
Solution
The per-unit price of electricity is higher in the commercial sector than in the domestic sector due to price discrimination, which charges various rates for the same product depending on customer groupings, demand elasticity and willingness to pay. The business sector has a less elastic need for power, allowing suppliers to raise rates, whereas the household sector has a more elastic demand. The market structure is imperfectly competitive and could be characterised as monopolistic competition.
APPEARS IN
RELATED QUESTIONS
Discuss any four differences between Monopoly and Monopolistic Competition.
There are many manufacturers of pencils on the market who produce pencils in different designs and colours to attract children. Which market form is referred to here? Briefly explain the features of this market form indicated in the given situation.
Oligopoly differs from monopolistic competition on the basis of number of sellers.
State any other difference between these two market forms.
