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Question
State with reason whether you agree or disagree with the following statement:
Selling cost is the only feature of monopolistic competition.
Solution
I disagree with the given statement.
Reason:
In addition to selling cost, monopolistic competition has many other features as follows:
- Fairly large number of sellers: There are a fairly large number of sellers in a monopolistic competition. However, it is not as large as the number of sellers in perfect competition.
- Fairly large number of buyers: There are a fairly large number of buyers in the monopolistic competition.
- Product differentiation: Product differentiation is the main feature of monopolistic competition. It means each product in this market is different from other products in some way or the other.
- Free entry and exit: New firms are free to enter the market if there is profit. Similarly, they can leave the market, if they find it difficult to survive.
- Close substitutes: The goods sold by different sellers in monopolistic competition are similar with few differentiating qualities. Hence, products sold in this market are close substitutes.
- Concept of group: Under monopolistic competition, Prof. Chamberlin introduced the concept of ‘Group’ in place of industry. Industry means a number of firms producing ‘identical’ products. A ‘Group’ means a number of firms producing ‘differentiated’ products which are closely related.
RELATED QUESTIONS
Choose the correct option:
Under Perfect competition, sellers are
a) Price makers
b) Price takers
c) Price discriminators
d) None of these
Give economic term:
The point where demand and supply curve intersect.
Give economic term:
The cost incurred by the firm to promote sales.
Give economic term:
Charging different prices to different consumers for the same product or services.
Find the odd word out:
Market structure on the basis of competition: Monopoly, Oligopoly, Very Short Period market, Perfect competition.
Characteristics of long period market:
- All factors of production and costs are variable.
- Firms are able to adjust all costs.
- It is for a few years, generally up to five years.
- Supply of commodity cannot be increased.
Monopoly: Price discrimination:: ______ : Product differentiation
Type of market showing some but not all the features of a competitive market –
Find the odd word
Market on the basis of place -
The interaction of demand and supply to determine price of a commodity in perfect competition is ______.
Product differentiation is the main feature of ______.
Assertion (A): Product differentiation is the main feature of monopolistic competition.
Reasoning (R): Under monopolistic competition, all the products are perfect substitutes to each other
Identify & explain the concept from the given illustration.
Sunrise Cosmetic Company spends on advertisements, broadcasts on radio and television as well as distributes free samples of its shampoo product to in order to increase its demand.
Distinguish Between
Short period and Long period
Distinguish Between
Monopoly and Monopolistic competition
Explain any four features of perfect competition
Explain any four features of monopoly
Explain any four features of monopolistic competition
State with reason whether you agree or disagree with the following statement:
Seller is the price maker under perfect competition.
State with reason whether you agree or disagree with the following statement:
There is product differentiation under monopolistic competition.
Study the following table, figure, passage and answer the question given below it.
| Price per unit in Rs. | Quantity demanded | Quantity supplied |
| 5 | 100 | 500 |
| 4 | ______ | 400 |
| 3 | 300 | ______ |
| 2 | ______ | 200 |
| 1 | 500 | ______ |
- Complete the table (2m)
- Derive the equilibrium price from the above table with the help of Suitable diagram. (2m)
- Mention the equilibrium point and equilibrium price in above diagram. (2m)
- Explain the concept of equilibrium price with the help of above diagram (2m)
Explain the concept of perfect competition and price determination under perfect competition
What are the features of a market?
The Spot market is classified on the basis of ______.
Which one of the market deals in the purchase and sale of shares and debentures?
What is meant by Spot Market?
What is meant by Spot Market?
What is meant by Commodity Market?
How the market can be classified?
How the market can be classified on the basis of Economics?
Give economic terms:
The period in which all factors of production are variable.
Assertion and reasoning question:
- Assertion (A): With a rising price, the supply of a commodity falls.
- Reasoning(R): Seller earns more profit at a higher price.
Find the odd word out:
Classification of markets on the basis of time:
Give an economic term:
Period in which supply is fixed and so the price is determined by demand only.
Homogeneous product is a feature of this market.
- Monopoly
- Monopolistic competition
- Perfect competition
- Oligopoly
Read the given passage and answer the questions:
|
In common language the term market means a specific place where buyers and sellers of a commodity meet and exchange their goods. But in Economics it is not necessarily a place but it is an arrangement through which buyers and sellers come in contact with each other directly or indirectly and exchange of goods takes place among them. Market can be classified on the basis of place, time and competition. Market on the basis of competition is perfect competition and imperfect competition. Perfect competition is an imaginary concept of market and in reality, we observe various types of imperfect competition like monopoly, duopoly, oligopoly and monopolistic competition. In practice monopolistic competition is used. In this market there are some features of perfect competition and monopoly acting together. The uniqueness of this market lies in the fact that a difference is made between cost of production and selling cost. Selling cost refers to the cost incurred by the firm to create more demand for its product and increase the volume of sale. It includes expenditure on advertisement, hoardings, window display etc. |
Questions:
- Explain the concept of Market from Economic sense.
- Write the classification of Market.
- Write your own opinion about selling cost.
