Question:
Suppose that the demand curve for the XYZ company slopes downward and to the right. Would you conclude that the firm is a price taker or a price maker? Give reasons.
Answer:
- Since the demand curve of XYZ Co. is downward sloping, it has to lower its price to sell additional units of output.
- But in perfect competition the demand curve is parallel to x-axis as the firm can sell any amount of the output at the same price.
- Hence, XYZ Co. is not a price- taker but a price maker.
Non-Competitive Markets
Q 1.
What is the importance of monopoly?
Q 2.
Which features of monopolistic competition are competitive in nature?
Q 3.
What is a price-maker firm?
Q 4.
Under monopoly a firm sells the goods at a single price.
Q 5.
Why is the demand curve under monopoly less elastic as compared to the demand curve under monopolistic competition?
Q 6.
Under which market form, firm is a price-maker?
Q 7.
Which features of monopolistic competition are monopolistic in nature?
Q 8.
What is the value of MR when the demand curve is elastic?
Q 9.
Demand curve facing a monopoly firm is a constraint for the monopolist."Comment.
Q 10.
How many firms are there in a monopoly market?
Q 11.
Under monopolistic competition there is only one seller of the product.
Q 12.
Why AR curve (demand curve) under monopolistic competition is more elastic than AR curve under monopoly?
Q 13.
Explain the main features of barriers to the entry of firms.
Q 14.
Under oligopoly, there are large number of buyers and sellers.
Q 15.
Giving reasons, state whether the following statements are true or false.
Under monopoly all firms can sell at any price.
Q 16.
What is the reason for the long run equilibrium of a firm in monopolistic competition to be associated with zero profit?
Q 17.
Define product differentiation.
Q 18.
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?
Q 19.
What are the shapes of AR and MR curves under monopoly?
Q 20.
List the three different ways in which oligopoly firms may behave.
Q 21.
Give reasons for the following statements:
- Demand curve facing a perfectly competitive firm is a horizontal straight line.
- Demand curve facing a monopolistic competitive firm is a downward sloping curve.
- Demand curve facing a monopoly firm is less elastic than that curve facing a monopolistic competitive firm.
Q 22.
Under monopoly new firms can enter the industry to raise the supply.
Q 23.
What does Monopolistic Competition mean?
Q 24.
Give reasons for the following statements:
- A perfectly competitive firm is a price-taker.
- Product differentiation is a characteristic feature of a monopolistic competitive market,
- A monopolist cannot fix both the quantity that he likes to produce and the price at which he would like to sell.
Q 25.
Price discrimination should be socially desirable. How?
Q 26.
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.
Q 27.
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?
Q 28.
In monopoly, firm is different from industry.
Q 29.
In spite of having monopoly why the Indian Railways has not increased the fare for many years?
Q 30.
Compare between perfect competition and monopoly.
Q 31.
Under monopolistic competition, a firm faces a perfectly elastic demand curve.
Q 32.
How the efficiency may increase if two firms merge?
Q 33.
Explain the implication of the following: The feature of no close substitutes' under monopoly.
Q 34.
Under monopolistic competition, all the customers have perfect knowledge of the market conditions.
Q 35.
Although there are few (more than one) firms in oligopoly. Even these firms can enjoy monopoly power. How?
Q 36.
"A day without selling costs is nearly impossible". Comment.
Q 37.
What is meant by prices being rigid? How can oligopoly behaviour lead to such an outcome?
Q 38.
Give the meaning of Oligopoly'.
Q 39.
Explain the feature of few firms in an oligopoly market.
Q 40.
In which form of market there is product differentiation?
Q 41.
What do you mean by duopoly?
Q 42.
If the firm in the toothpaste industry have the following market shares, which market structure would best describe the industiy? [1 Mark]
Q 43.
Explain why the demand curve facing a firm under monopolistic competition is negatively sloped?
Q 44.
Selling cost is a nail in the coffin of consumer's sovereignty. How?
Q 45.
Discuss the relationship between total revenue, average revenue and marginal revenue under perfect competition and monopolistic competition. Use diagrams.
Q 46.
Suppose that the demand curve for the XYZ company slopes downward and to the right. Would you conclude that the firm is a price taker or a price maker? Give reasons.
Q 47.
A monopolist can sell any quantity he likes at a price. Give reasons with true or false.
Q 48.
Explain any two sources of restricted entry under monopoly.
Q 49.
Under monopolistic competition price discrimination can be made easily.
