Scanner - Forms of Market(2016-2018) Notes | Study Crash Course of Micro Economics -Class 12 - Commerce

Commerce: Scanner - Forms of Market(2016-2018) Notes | Study Crash Course of Micro Economics -Class 12 - Commerce

The document Scanner - Forms of Market(2016-2018) Notes | Study Crash Course of Micro Economics -Class 12 - Commerce is a part of the Commerce Course Crash Course of Micro Economics -Class 12.
All you need of Commerce at this link: Commerce

CBSE 2016

(Q1) Differentiated products is a characteristic of : (Choose the correct alternative) (1M)

(a) Monopolistic competition only (b) Oligopoly only (c) Both monopolistic competition and oligopoly (d) Monopoly

(Q2) Demand curve of a firm is perfectly elastic under : (Choose the correct alternative) (1M)

(a) Perfect competition (b) Monopoly (c) Monopolistic competition (d) Oligopoly

(Q3) ‘Homogenous products’ is a characteristic of : (choose the correct alternative)

(a) Perfect competition only (b) Perfect oligopoly only (c) Both (a) and (b) (d) None of the above

(Q4)  There is inverse relation between price and demand for the product of a firm under :

(a) Monopoly only      (b) Monopolistic competition only (c) Both under monopoly and monopolistic competition (d) Perfect competition only

(Q5) ‘A few big sellers’ is a characteristics of : (choose the correct alternative)

(a) Perfect competition (b) Monopolistic competition (c) Oligopoly (d) None

(Q6) Marginal revenue of a firm is constant throughout under : (choose the correct alternative) (a) Perfect competition (b) Monopolistic competition (c) Oligopoly (d)
Ans: 1(c) , 2(a) ,3(c) , 4(c) ,5(c) , 6(a)

(Q7) Explain the implications of the following in a perfectly competitive market : (6M)

(a) Large number of sellers (b) Homogeneous products.

Ans: (b) Homogeneous products means that buyers treat products of all the firms as same in all respect as homogeneous product.  As such no firm can charge a higher price because no buyer is willing to pay the same.  Then Market price remains the same for all the firms.

(Q8) Explain the implications of the following in an oligopoly market :

(a) Barriers to entry of new firms (b) A few or a few big sellers

Ans: (b) A few or few big sellers has the implication that each big seller contributes a fairly large share of total output.  This gives an individual seller the power of influencing the market price by changing its own output.

(Q9)  Explain the implications of the following in a perfectly competitive market : (6)

(a) Large number of buyers (b) Freedom of entry and exit to firms

(Q10)  Explain the implications of the following in an oligopoly market :

(a) Inter-dependence between firms (b) Non-price competition

Ans: (d) Non-price competition: means competition between firms by means other than changing price, like free gift, home service, customer care etc.  The firms in oligopoly do so to avoid price-war because the firm who starts the price-war may be the ultimate loser.

(Q11) Explain the implications of the following :

(a) Product differentiation in monopolistic competition. (b) Perfect knowledge in perfect competition.

(Q12) Explain the implications of the following :

(a) Interdependence between firms in oligopoly. (b) Large number of sellers in perfect competition

(a) Product differentiation implies that buyers differentiate products of firms various as different. So they are willing to pay different prices for the products of different firms . This product differentiation gives the power to an individual firm to influence the market price on their own.

(b) Perfect knowledge implies that buyers are fully aware of price in market and sellers of technique of production. Knowledge by buyers further implies that no buyer is willing to pay a higher price for the product of any firm. Knowledge by sellers implies that cost of production is same for all producers.

(Q13) What is ‘price taker’ firm ?

Ans: Price taker firm is one who has no option but to accept the price determined by the industry.

(Q14) What is price-maker firm ?

Ans: A price maker firm is one which can influence price on its own.

CBSE  2017

(Q1)  A seller cannot influence the market price under                      (1M)

(a) Perfect competition

(b) Monopoly

(c) Monopolistic competition

(d) All of the above

Ans: (a)

(Q2) Average revenue and price are always equal under 

(a) perfect competition only

(b) monopolistic competition only

(c) monopoly only 

(d) all market form

Ans:  (a) 

(Q3) In which form of market, is the demand of a firm perfectly elastic ?

(a) Perfect competition

(b) Monopolistic competition

(c) Monopoly

(d) Oligopoly

Ans: (a) 

(Q4) A firm is a price taker under

(a) Perfect competition

(b) Oligopoly

(c) Monopolistic competition

(d) Monopoly

Ans: (a) 

(Q5) A firm is not a price maker under

(a) oligopoly

(b) monopolistic competition 

(c) monopoly

(d) perfect competition

Ans:  (d) 

(Q6) There are large number of buyers and sellers in : (choose the correct alternative)

(a) Perfect competition only

(b) Monopolistic competition only

(c) Both in (a) and (b)

(d) Oligopoly 

Ans: (c) 

(Q7) A perfectly competitive firm faces : (Choose the correct alternative)

(a) Constant price

(b) Constant average revenue

(c) Constant marginal revenue

(d) All the above 

Ans: (d) 

(Q8) State any one feature of monopolistic competition.                    

Ans: 

(1) Large number of buyers & sellers.

(2) Differentiated product.    

(3) Free entry and exit of firms.        (Any one)                (1M)

(Q9) Explain “perfect knowledge about the markets” feature of perfect competition.       (4M)

Ans:  In a perfectly competitive market buyers and sellers have full knowledge about the market. So no seller can charge a price higher than the price determined by the market and no buyer is willing to pay the price higher than the market price.                    (4M)

(Q10) Distinguish between perfect oligopoly and imperfect oligopoly. Also explain the

interdependence between the firms” feature of oligopoly.                (6M)

Ans: In oligopoly market, if the product is homogeneous then it is called Perfect                oligopoly. When the product is hetrogeneous then it is called imperfect oligopoly.    (2M)

 Under oligopoly, firms are interdependent. There are only a few firms in such a market. If some firm changes its decision regarding its output or price, it will affect other firms. 

 They react so the firm while taking decision about price and output keeps in mind the reaction of other firms.                                                      (4M)

Q11) State any one feature of oligopoly.

(Q12) Explain the ‘free entry and exit of firms’ feature of monopolistic competition.

(Q13) Explain the “interdependence between firms” characteristic of oligopoly market

(Q14) Explain the implications of the “product differentiation” feature of monopolistic competition.

(Q15) Explain the feature “few firms” and its implications in an oligopoly market.

(Q16)  What difference does it make to the market when we say that there are large number of sellers in a perfectly competitive market ? Explain.

(Q17) Under which form of market a firm is called price taker ?

(Q18) Explain three main features of perfect Competition ?  

Ans: (1) Large number of buyers and sellers – The number of buyers and sellers is so large that an individual seller or buyer has insignificant share of total output sold or purchased. 

(2) Homogeneous products – The buyers treat the products of all the firms in the industry as identical/homogeneous. 

(3) Perfect knowledge – All producers and consumers are fully informed about the market. 

(4) Freedom of entry and exit – There are no barriers in the way of new firms joining the industry and existing firms leaving the industry      

CBSE 2018

(Q1) State three characteristics of monopolistics competition. Which of the characteristics separates it from perfect competition and why ?   (6M)

(Q2) Explain the implications of the following :        (6M)

(a) Freedom of entry and exit of firms under perfect competition 

(b) Non-price competition under oligopoly   

(Q3) Explain the implications of “freedom of entry and exit of firms” under perfect competition. (4M)

Ans: Freedom of Entry’, signifies that there are no barriers to the entry of new firms into industry. When the existing firms are earning supernormal profits, the new firms, attracted by the prospects of profit,enter the industry. This raises market supply which in turn leads tofall in market price and consequently profits. The entry continue still each firm is earning just the normal profits.

‘Freedom to exit’, signifies that there are no barriers which restrict the existing firms from leaving the industry. The firms try to leave when they are facing losses. As the firms start leaving market supply falls leading to rise in market price and consequently reduction in losses. The firms continue to leave till the losses are wiped out and each existing firm is earning just the normal profits.                                                               (to be marked as a whole) 

The document Scanner - Forms of Market(2016-2018) Notes | Study Crash Course of Micro Economics -Class 12 - Commerce is a part of the Commerce Course Crash Course of Micro Economics -Class 12.
All you need of Commerce at this link: Commerce

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