CBSE Class 12 Economics Non Competitive Markets MCQs Set C

Question: Differentiated products is a characteristic of
a) Monopolistic competition only
b) Oligopoly only
c) Both Monopolistic competition & Oligopoly
d) Monopoly
Answer: c

Question: In perfect competition, when the marginal revenue and marginal cost are equal, profit is
a) Zero
b) Average
c) Maximum
d) Negative
Answer: c

Question: Market which has two firms is known as
a) Duopoly
b) Monopolistic Competition
c) Oligopoly
d) None of These
Answer: a

Question: The firm and the industry are one and the same in
a) Monopolistic competition
b) Monopoly
c) Duopoly
d) Oligopoly
Answer: b

Question: Cartels exist in
a) Oligopoly
b) Duopoly
c) Monopoly
d) Perfect Competition
Answer: a

Question: Pure oligopoly is based on the
a) Differentiated products
b) Homogeneous products
c) Unrelated products
d) None of these
Answer: b

Question: Which of the following is not the feature of an imperfect competition?
a) Large number of buyers
b) Single seller
c) Homogeneous products
d) Price maker
Answer: c

Question: The firm and the industry are one and the same in—
a) Perfect competition
b) Monopolistic competition
c) Duopoly
d) Monopoly
Answer: d

Question: Which market has characteristic of product differentiation?
a) Monopolistic competition
b) Oligopoly
c) Monopoly
d) Perfect competition
Answer: a

Question: A monopolist is a price
a) Acceptor
b) Taker
c) Giver
d) Maker
Answer: d

Question: Under which one of the following forms of market structure does a firm have no control over the price of its product?
a) Monopoly
b) Monopolistic competition
c) Oligopoly
d) Perfect competition
Answer: d

Question: Monopolistic competition differs from perfect competition primarily because
a) In monopolistic competition firms can differentiate their products
b) In perfect competition firms can differentiate their products
c) In monopolistic competition entry into the industry is blocked
d) In monopolistic competition there are relatively few barriers to entry
Answer: a

Question: Suppose that the demand curve for the XYZ Co. slopes downward and to the right. We can conclude that
a) The firm operates in a perfectly competitive market
b) The firm can sell all that it wants to at the established market price
c) The XYZ Co. is not a price taker because it must lower the price to sell additional units
d) The XYZ Co. will not maximise profits because price and revenue are subject to change
Answer: c

Question: Oligopoly having identical products is known as
a) Pure oligopoly
b) Collusive oligopoly
c) Independent oligopoly
d) None of above
Answer: a

Question: In monopolistic competition, which of the following curves generally lies below the demand curve and slopes downward?
a) Marginal cost
b) Average cost
c) Average revenue
d) Marginal revenue
Answer: d

Question: Which of the following is not a characteristic feature of imperfect competition?
a) Prices vary from seller to seller
b) All the products are homogeneous
c) Profits of the seller is included in the price
d) None of above
Answer: b

Question: In monopoly
a) There are many producers
b) There is no seller
c) There is no buyer
d) There is single seller
Answer: d

Question: In the monopolistic market, which curve lies below the demand curve and slopes downward?
a) Marginal cost
b) Average cost
c) Average revenue
d) Marginal revenue
Answer: d

Question: Cartels exist in
a) Oligopoly
b) Duopoly
c) Monopoly
d) Perfect competition
Answer: a

Question: Which of the following is not the feature of an imperfect competition?
a) Homogeneous products
b) Price maker
c) Single seller
d) Large number of buyers
Answer: c

Question: A monopolist is a price
a) Maker
b) Taker
c) Giver
d) Acceptor
Answer: b

Question: In perfect competition, a firm earns abnormal profit when __________ exceeds the _____________?
a) Marginal cost, marginal revenue
b) Average revenue, average cost
c) Total revenue, total fixed cost
d) Total cost, total revenue
Answer: b

Question: In monopolistic competition, which of the following curves generally lies below the demand curve and slopes downward?
a) Average revenue
b) Marginal revenue
c) Average cost
d) Marginal cost
Answer: d

Question: In the case of a negatively sloping straight line demand curve, the total revenue curve is
a) Concave to the origin
b) An inverted vertical parabola
c) A rectangular hyperbola
d) Convex to the origin
Answer: c

Question: Cartels exist in
a) Monopoly
b) Perfect Competition
c) Duopoly
d) Oligopoly
Answer: c

Question: In monopolistic competition the goods are
a) Heterogeneous
b) Differentiated
c) Homogeneous
d) Durable
Answer: b

Question: Which market have characteristic of product differentiation
a) Monopolistic competition
b) Perfect competition
c) Oligopoly
d) Monopoly
Answer: a

Very Short/Short Answer Type Questions

Question: Equilibrium price of an essential medicine is too high. What can be done to bring the price down only through market forces? Explain the series of changes that will occur in the market.
Answer : One possible step can be to reduce tax on medicine or subsidy which will eventually help to bring down the price and in turn increase the supply.
Demand remaining unchanged, a situation of excess supply will emerge which will lead to competition between sellers. This will lead to fall in price of the medicine.

Question: Explain the effects of a ‘price ceiling’.
Answer : Black marketing may be termed as a direct consequence of price ceiling. It implies a situation whereby the commodity under the government’s control policy is illegally sold at a higher price than the one fixed by the government.
It may primarily arise due to the presence of consumers who may be willing to pay higher price for the commodity than to go without it.

Question: Market for a good is in equilibrium. Demand for the good “increases”.
Explain the chain effects of this change.
Answer : ‘Given equilibrium, demand increases’, the chain effects of the change are as follows:-
1. Price remaining unchanged, excess demand emerges
2. This leads to competition among buyers causing price to rise
3. Rise in price causes fall or contraction in demand and rise or expansion in supply
4. The price continues to rise till the market is in equilibrium again at a higher price

Long Answer Type Questions

Question: Explain the implications of the following features of oligopoly market.
(i) Few firms
(ii) Barriers to the entry of firms
Answer : The implications are as follows:
1. When there are few firms in the market, this is called oligopoly. However, each firm is so big that it controls a specific consumer segment in the market.
It is so important that price or output policy of one firm directly affect the price and output policy of rivals. Hence, it is also not possible to draw a specific demand curve for an oligopoly firm. We have seen that oligopoly firms tend to form trusts and cartels with a view to avoid price competition in the market. In this way they enjoy monopoly profits. But this is very few in the overall market.
2. When there are barriers to the entry of firms, it is always more. These barriers are almost similar to those under monopolistic situations. Entry of a new firm is extremely difficult, but possible. These barriers can be natural like requirements of huge capital or operating at minimum average cost of artificial barriers like patent rights. They mainly prevent new entrants in the market.