Which one of the following is incorrect combination with regard to the types of market structures ?
| Market Structure | No. of firms and degree of product differentiation | Control over price |
|---|---|---|
| Monopoly | Single firm with close substitute | Some |
To determine the incorrect combination among the given market structures, let's analyze each option with respect to the characteristics of market structures:
- Perfect Competition: In a perfectly competitive market, there are a large number of firms producing homogeneous products, meaning no product differentiation, and firms have no control over the price. This combination is correct.
| Market Structure | No. of firms and degree of product differentiation | Control over price |
|---|---|---|
| Perfect competition | Large number of firms with homogeneous products | None |
- Monopolistic Competition: This type of market structure includes many firms with products that are differentiated, either real or perceived. Firms have some control over pricing due to differentiation. This combination is correct.
| Market Structure | No. of firms and degree of product differentiation | Control over price |
|---|---|---|
| Monopolistic Competition | Many firms with real or perceived product differentiation | Some |
- Oligopoly: Typically, an oligopoly consists of a few firms which may offer similar or differentiated products, and there is significant control over price due to the limited number of firms. The description given—"little or no product differentiation and many firms"—is incorrect, as oligopolies do not have many firms like a competitive market does, and there is usually some level of product differentiation or at least strategic interaction among the firms. Thus, this option is incorrect.
| Market Structure | No. of firms and degree of product differentiation | Control over price |
|---|---|---|
| Oligopoly | Little or no product differentiation and many firms | Some |
- Monopoly: A monopoly is characterized by a single firm that has a unique product with no close substitutes. This firm has significant control over pricing. The statement claiming a monopoly has a "single firm with close substitutes" is incorrect, as monopolies do not have close substitutes.
| Market Structure | No. of firms and degree of product differentiation | Control over price |
|---|---|---|
| Monopoly | Single firm with close substitute | Some |
Conclusion:
Based on the above analysis, both the descriptions for Oligopoly and Monopoly contain incorrect combinations. However, according to the given question, the provided correct answer is the incorrect description of Monopoly.
Important Questions from Price determination under different market forms
The demand curve that a firm faces in a perfectly competitive market is perfectly _______________ ; it is a _____________straight line at the market price.
For a monopolist, profit is maximized at that level of output where:
When the maximum price is fixed below the equilibrium price, which of the following occurs as a result?
Excess supply
Excess demand
Black marketing
A price ceiling below the equilibrium price of a commodity leads to
A. Commodity glut in market
B. Shortage of commodity
C. Demand erosion
D. Black marketing
Choose the correct answer from the options given below:
Given below are two statements, one is labelled as Assertion A and the other is labelled as Reason R
Assertion A: An oligopolist firm cannot decide the price it wishes to charge as well as the quantity it wishes to sell, both at the same time.
Reason R: An oligopolist firm takes into consideration the competitor's actions and counter actions because of a strong interdependence among the competitive firms
In light of the above statements, choose the most appropriate answer form the options given below
