Forms of Market

1 Mark Questions

1. What is imperfect oligopoly? (All India 2014)

Ans. Imperfect oligopoly is that market situation in which all firms produce differentiated but close substitutes e.g. Automobile industry.

2. What is perfect oligopoly? (Delhi 2014)

Ans. Perfect oligopoly refers to a market where all the firms are producing homogeneous product.

3. State the main features of a perfectly competitive market. (Compartment 2014)

Ans. Features of perfect competition are as follows:

1. Very large number of buyers and sellers, (b) Homogeneous product
2. Perfect knowledge about market. (d) Freedom of entry and exit.

4. What is meant by collusive oligopoly? (Compartment 2014)

Ans. Under oligopoly, when two or more firms decide to cooperate with each other in price and output decision is known as collusive oligopoly.

1. State whether the following statement is true or false. 'A monopolist can sell

any quantity at the price, he likes'. Give reason. (hots; Delhi 2013)

Ans. No, the statement is not correct, even though a monopolist has full control over price, however in order to sell greater units it must reduce its price of additional units.

6. Which is a price taker firm? (Delhi 2012; All India 2012)

Ans. A perfectly competitive firm is a price taker firm which takes the price from the market which is determined by the market forces of demand and supply.

7. When is a firm called price taker? (Delhi 2011)

Ans. The firm is called price taker when it has to accept the price that are determined by the market forces of demand and supply and hence cannot decide the price.

8. When is a firm called price maker? (All India 2011)

Ans. The firm is called price maker when the price of the commodity is determined by the firm itself.

1. Which market form has the least number of producers? (All India 2011) or

Under which form of market, is a firm price maker? (Delhi 2008C) or

In which market there is only one firm? (All India 2006)

Ans. Monopoly, where, there is only a single seller in the market.

10.Define oligopoly. (Delhi 2011c, 2010)

Ans. It is a form of market in which there are few large firms that sell both homogeneous as well as differentiated products.

11. Name the characteristic which makes monopolistic competition different

from perfect competition. (Delhi 2010)

Ans. In perfect competition, there is homogeneous product and in monopolistic competition, there is a product differentiation.

12. State one feature of oligopoly. (Delhi 2010)

Ans. Large number of buyers and few large sellers is one of the main features of oligopoly.

13.In which market form a firm cannot influence the price of the product? (All India 2010)

or In which market, firm is a price taker? (All India 2007)

Ans. In perfect competition, firms cannot influence price of the product because of their large numbers.

14. Define monopoly. (All India 2010; Delhi 2009)

Ans. It is the form of the market in which there is single seller of a commodity with complete control over its price.

15. What can you say about the number of buyers and sellers under

monopolistic Competition? (All India 2010)

Ans. There are large number of sellers and large number of buyers under monopolistic competition.

16. Give meaning of monopolistic competition. (All India 2010)

Ans. Monopolistic competition refers to that form of market in which there is a large number of sellers, selling differentiated product but closely related goods.

17. What is the effect on price when a perfectly competitive firm tries to sell more? (Delhi 2009C)

Ans. It will remain constant because firms do not have any control over prices, thus it can sell any quantity at a given price.