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Frequently Asked Questions - Forms of Market and Price Determination | Economics Class 11 - Commerce PDF Download
FREQUENTLY ASKED QUESTIONS – CBSE BOARD EXAMINATION
One Mark Questions (1M)
- In which market form can a firm not influence the price of the product?
- What is equilibrium price?
- Under which market form a firm is a price taker?
- Define market equilibrium.
- Define Monopoly.
- State one feature of Oligopoly.
Three Marks Questions (3M)
- Why is the number of firms small in an Oligopoly Market? Explain.
- Explain three features of Monopoly.
- How is equilibrium price of a commodity affected by a decrease in demand?
- Why is the demand curve more elastic under monopolistic competition than under monopoly? Explain.
- Explain the feature ‘differentiated product’ of a market with monopolistic competition.
- Explain the effect of ‘large number of buyers and sellers’ in a perfectly competitive firm.
Four Marks Questions (4 M)
- Distinguish between Monopoly and Perfect Competition.
- Draw the Average Revenue Curve of a firm under a) Monopoly and b) Perfect Competition. Explain the difference in these curves, if any.
- Show with the help of a diagram the effects of an increase in demand for a commodity on its equilibrium price and quantity.
- Explain with the help of a diagram the determination of price of a commodity under perfect competition.
- Explain the concept of equilibrium price with the help of market demand and supply schedules.
Six Marks Questions (6 M)
- Given the market equilibrium of a good. What are the effects of Simultaneous increase in both demand and supply of that good on its equilibrium price and quantity?
- Distinguish between perfect competition and monopoly. Why is the demand curve facing a firm under perfect competition perfectly elastic?
- Explain briefly the three feature of perfect competition.
- Explain the chain of effects on demand, supply and price of a commodity caused by a leftward shift of the demand curve. Use diagram.
- Explain three feature of Monopolistic Competition
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FAQs on Frequently Asked Questions - Forms of Market and Price Determination - Economics Class 11 - Commerce
| 1. What are the different forms of market in commerce? |  |
Ans. The different forms of market in commerce include perfect competition, monopolistic competition, oligopoly, and monopoly. Perfect competition is characterized by a large number of buyers and sellers, homogeneous products, and ease of entry and exit. Monopolistic competition involves many sellers offering differentiated products. Oligopoly refers to a market dominated by a few large firms, while monopoly is a market with only one seller.
| 2. How is price determined in a perfect competition market? | |
Ans. In a perfect competition market, price is determined by the forces of demand and supply. The equilibrium price is reached where the quantity demanded by buyers is equal to the quantity supplied by sellers. If the market price is higher than the equilibrium price, there will be a surplus, leading to a decrease in price. Conversely, if the market price is lower than the equilibrium price, there will be a shortage, resulting in an increase in price.
| 3. What is the role of product differentiation in monopolistic competition? | |
Ans. Product differentiation plays a significant role in monopolistic competition. It refers to the process of making a product distinct from others in terms of quality, design, features, or branding. By differentiating their products, firms aim to create a perceived uniqueness and gain a competitive advantage. This allows them to have some control over the price, although they still face competition from other firms offering similar but not identical products.
| 4. How do firms behave in an oligopoly market? | |
Ans. In an oligopoly market, firms behave strategically and are interdependent. They closely monitor the actions and reactions of their competitors. Since there are only a few firms dominating the market, their decisions regarding pricing, production, and product differentiation can significantly impact the market dynamics. Firms in an oligopoly market often engage in non-price competition, such as advertising, product innovation, and strategic alliances, to gain a competitive edge.
| 5. What are the characteristics of a monopoly market? | |
Ans. A monopoly market is characterized by a single seller dominating the market. The monopolist has complete control over the supply of the product and faces no competition. This allows the monopolist to set prices at a level that maximizes their profits. Moreover, entry into the market is restricted, either due to legal barriers or high costs, preventing the entry of new firms. Monopoly markets often lack efficiency and consumer choice, leading to potential concerns for consumer welfare.
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