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N. C.E.R.T Questions

(Q1) What would be the shape of demand curve so that TR curve is a positively sloped straight line passing through origin ?

(Q2) Why is the demand curve facing a monopolistically competitive firm likely to be very elastic

(Q3) Name two forms of imperfectly competitive markets ?

(Q4) How many firms are there in a monopoly market ?

(Q5) Which features of monopolistic competition are monopolist in nature ?

(Q6) Which features of monopolistic competition are competitive in nature?

(Q7) What are selling cost and advertisement cost and persuasive advertising ?

C.B.S.E Questions

(Q1) Explain three main features of perfect Competition ?

(Q2) Explain the features of Monopoly Market ?

(Q3) In which market form are average and marginal revenue of a firm always equal ? or Under which market form, is a firm a price taker ?

(Q4) In which form of market there is product differentiation ?

(Q5) In which form of market are the product homogenous ?

(Q6) Distinguish between monopoly and monopolistic competition ?

(Q7) Why is the average revenue curve of a firm under perfect competition parallel to x-axis and negatively sloped under monopoly ?

(Q8) Draw the average revenue curve of a firm under (i) Monopoly (ii) Perfect Competition. Explain the difference in these curve, if any.

CBSE + Sample Paper Questions

(Q1) Explain what happens to the profits in the long run if the firms are free to enter the industry.

(Q2) Explain what happens to losses in the long run if the firms are free to leave the industry.

(Q3) Explain the implications of the following:

(i) The feature ‘differentiated products’ under monopolistic competition.
(ii) The feature ‘large number of sellers’ under perfect competition.

(Q4) What is meant by the term price taker in the context of a firm?(1)

(Q5) What induces new firms to enter an industry ?(1)

(Q6) Explain the implication of the feature Freedom of entry and exit of firms.(3M)

(Q7) State any two features each of monopoly and monopolistic competition. OR State four features of a perfectly competitive market.

CBSE Questions

(Q1) Explain two points of distinction between monopoly and monopolistic competition (4)

OR
Explain any two main features of perfect competition.

CBSE + Sample Paper Questions

(Q1) Inwhich market form can a firm not influence the price of the product ?(1M)

(Q2) Define monopoly.(1M)

(Q3) What can you say about the number of buyers and sellers under monopoplistic competition?(1M)

(Q4) Why is the number of firms small in an oligopoly market ? Explain.(3M)

(Q5) Giving rason, distinguish between the behaviour of demand curve of firms under perfect competition and monopolistic competition.(3M)

(Q6) Why is the demand curve more elastic under monopolistic compentition than under monoploy ? Explain.(3M)

(Q7) Explain the implication of ‘product differentiation’ feature of monopolistic competition.(3 M)

(Q8) Explain the implication of ‘homogenous product’ feature of perfect competition.

(Q9) Explain the implications of the following features of perfect competition :(6 M)

(a) large number of buyers and sellers
(b) freedom of entry and exit of firms

CBSE Questions

(Q1) When is a firm called price maker ?(1 mark)

(Q2) Distinguish between ‘non-collusive’ and ‘collusive’ oligopoly. Explain the following features of oligopoly :(6 marks)

(i) Few firms
(ii) Non-price competition

(Q3) Explain the implications of the feature ‘large number of buyers’ in a perfectly competitive market.(3 marks)

(Q4) Explain the implications of the feature ‘homogeneous products’ in a perfectly competitive market.(3 marks)

(Q5) What is a price-maker firm ?(1 mark)

(Q6) Explain the implications of large number of sellers in a perfectly competitive market.

(Q7) Explain why there are only a few firms in an oligopoly market.(3 marks)

(Q8) Name the feature that differentiates monopolistic competition different from perfect competition ?

(Q9) Explain how firms are interdependent in an oligopoly market

(Q10) Explain why are firms mutually interdependent in an oligopoly market .

(Q11) Distinguish between collusive and non-collusive oligopoly . Explain how the oligopoly firms are interdependent in taking price and output decisions 

(Q12) Distinguish between Cooperative and non-cooperative oligopoly . Explain the following features of oligopoly (i) Barriers to the entry of Firms (ii) Non - Price competition
(iii) Few firms

(Q13) Explain the implication of the following ‘ differentiated product” in monopolistic competition ? 

C.B.S.E & Sample Paper Questions

(Q1) Under which market form is a firm a price taker ?(1 M)

Ans: Perfect competition

(Q2) What is cooperative oligopoly ?(1 M)

Ans:When in an oligopoly market, the firms cooperate with each other in determining price and output, it is called Cooperative Oligopoly.

(Q3) An individual firm under perfect competition cannot influence the market price, then who can and how ?(1 mark)

Ans: Under perfect competition the ‘industry’ can influence market price by raising or lowering output.

(Q4) Why can a firm not earn abnormal profits under perfect competition in the long run ? Explain.(3 M)

Ans:Under perfect competition there is freedom of entry to firms into industry. W hen there are abnormal profits, new firms will enter. This will increase supply and price will fall. This process will continue till abnormal profits are wiped out.

(Q5) Why is the demand curve of a firm under monopolistic competition more elastic than under monopoly ? Explain.(3M)

Ans: Under monopoly there are no close substitutes of the good but under monopolistic competition there are close substitutes of the good in market. Therefore, under monopoly consumers have no choice other than buying the product whereas in monopolistic competition, close substitution provide a variety of options for the consumer. It makes the demand under monopolistic competition more elastic than under monopoly.

(Q6) Explain the implications of the following :
(i) Freedom of entry and exit to firms under perfect competition.
(ii) Interdependence between firms under oligopoly. (6 marks)

(Q7) Explain “ Large Number of buyesr and sellers “ feature of a perfectly competitive market

Ans: The feature implies that the number of sellers (firms) in the market is so large that no individual seller on its own can influence the market price. It is because the individual seller’s share in the total market supply is negligible. Also, the number of buyers in the market is so large that no individual buyer on its own can influence the market price. It is because the individual buyer’s share in total demand is negligible

(Q8) A monopolist can sell any quantity he likes at a price

Ans: False. A monopolist can sell more quantity only by lowering the price because the monopolist controls only the supply and not the demand.

(Q9) Explain two features of monopoly market

Ans: (a)There is only one single seller in the market so that the seller can influence the market price on its own. (b) There are no close substitutes so that there is no competition in the market. (c) There are barriers to entry of new firms so that the seller, if getting above normal profits,can continue to get abnormal profit. (any two features)    

C.B.S.E Paper Questions 

(Q1) What is imperfect oligopoly ?(1M)

Ans: If in an oligopoly market the firms produce differentiated products, it is called imperfect oligopoly.

(Q2) Why is the number of firms small in oligopoly ? Explain.(3M)

Ans: The main reason why the number of firms is small is that there are barriers which prevent entry of firms into industry. Patents, large capital requirement control over the crucial raw materials, etc. prevent new firms from entering the industry. Only those who are able to cross these barriers enter.

(Q3) Explain three main features of perfect competition.(3M)

(Q4) Why is demand curve of a firm under monopolistic competition more elastic than under monopoly? Explain.(3M)

(Q5) Why can a firm not earn abnormal profits under perfect competition in the long run ? Explain.(3M)

(Q6)  What is imperfect oligopoly ?

Ans: If in an oligopoly market firms produce homogeneous products, it is called perfect oligopoly.

(Q7) Why are the firms said to be interdependent in an oligopoly market ? Explain

Ans: When there are only a few firms in the market, it is likely that each firm has some knowledge as to how its rivals operate. Each firm expects reactions from the rival firms. Therefore, each firm in deciding price and output, takes into account the expected reactions by the rival firms. In this way the firms are interdependent on each other.

(Q8) What is meant by collusive Oligopoly

Ans: W hen in an oligopoly market firms co-operate with each other in determining price and output , it is called collusive oligopoly

(Q9) Explain the implication of large buyers in a perfectly competitive market ?

Ans: The large number of buyers is assumed to be so large that an individual buyer’s share in total purchases is so negligible that he cannot influence the market price on its own by purchasing more or less. The outcome is that price remains unchanged.

SAMPLE PAPER Questions

(Q1) Discuss the primary reason for ‘indeterminateness of demand curve’ under the oligopoly form of market.

(Q2) Explain the implications of freedom of entry and exit of firms under perfect competition.

(Q3) Explain the implications of freedom of entry and exit of firms under perfect competition. (3)

Ans: Freedom of entry and exit of firms under perfect competition means that there are no costs or barriers a firm faces to enter or exit the market. The implication of this is that in the long run each firm earns only normal profit.
Suppose in the short run, existing firms are earning super normal profits, new firms enter the industry as they are attracted by profits. This raises the market supply and reduces the market price. As firms accept the lower market price, profits reduces. This process continues till profits reduce to normal levels in the long run.
The opposite occurs if firms are earning losses as firms leave the industry. This reduces market supply and raises market price till losses get wiped out and firms earn only normal profit in the long run.

C.B.S.E Paper Questions

(Q1) Explain the implication of non-price competition in an oligopoly market.(3 M)

Ans: Non-Price competition means competition between firms on the basis of methods other than price. Firms try to avoid price competition for the fear of price-war. They use other methods like advertising, better services to customers. etc to compete with each other.

(Q2) Distinguish between cooperative and non-cooperative oligopoly.(3 M)

Ans: When firms in an oligopoly market co-operate with each other in determining price or output or both, it is called co-operative oligopoly. When the firms compete with each other it is called non-co-operative oligopoly

(Q3) In a perfectly competitive market, the buyers treat products of all the firms as homogeneous. Explain the significance of this feature.(3 M)

Ans: This implies that buyers do not differentiate between products of different firms in the industry. As such they are willing to pay only the same price for the products of all the firms.
As a result a uniform price prevails in the market

(Q4) Explain any two sources of restricted entry under monopoly.[SP (3M)]

(Q5) What is meant by price rigidity, under oligopoly.[SP (2M)]

(Q6) Explain ‘homogeneous products’ feature of perfect competition.[(AI (C)]

(Q7) There are large number of sellers in a perfectly competitive market. Explain the significance of this feature.(F)

(Q8) Why is a firm under perfect competition a ‘price taker’ and not a ‘price-maker’ ? Explain.

(Q9) Explain ‘non-price competition’ feature of oligopoly.[Delhi (C)]

(Q10) Explain the significance of ‘barriers to entry’ feature of monopoly.[AI (C)]

CBSE Questions

(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.