Under oligopoly though firms are free to take decisions about price and quantity to be sold but they do not change the price and hence buyers are deprived of the benefit of fall in price. Comment.
Oligopoly firms are mutually dependent and therefore while fixing the price and the output they are guided by the reactions of other firms. As such price tends to be rigid and the consumers suffer.
Value: Critical thinking
What is the reason for the long run equilibrium of a firm in monopolistic competition to be associated with zero profit?
Why AR curve (demand curve) under monopolistic competition is more elastic than AR curve under monopoly?
Why is the demand curve under monopoly less elastic as compared to the demand curve under monopolistic competition?
Give reasons for the following statements:
Giving reasons, state whether the following statements are true or false.
Under monopoly all firms can sell at any price.
In spite of having monopoly why the Indian Railways has not increased the fare for many years?
Under oligopoly though firms are free to take decisions about price and quantity to be sold but they do not change the price and hence buyers are deprived of the benefit of fall in price. Comment.
Under monopolistic competition, all the customers have perfect knowledge of the market conditions.
How to reduce the incidence of selling cost under monopolistic competition because of which price tends to be higher than what it would have been if production cost would have been the sole basis?
Give reasons for the following statements:
Because of product differentiation under monopolistic competition, price tends to be higher than what it ought to have been in real terms and hence consumers suffer. How?
Although there are few (more than one) firms in oligopoly. Even these firms can enjoy monopoly power. How?
What is meant by prices being rigid? How can oligopoly behaviour lead to such an outcome?
Explain the implication of the following: The feature of no close substitutes' under monopoly.
If the firm in the toothpaste industry have the following market shares, which market structure would best describe the industiy? [1 Mark]
Average revenue will always be equal to marginal revenue in all market conditions. Defend or refute.
Draw a demand curve in different market situation and also compare its elasticity of demand.
Explain why the demand curve facing a firm under monopolistic competition is negatively sloped?
A monopolist can sell any quantity he likes at a price. Give reasons with true or false.