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Monopsony

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Question

According to Chamberlin excess capacity and higher prices in monopolistic competition is due to ________.

A

greed of the business enterprise

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B

due to ignorance of consumers

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C

non price competition and free entry

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D

quality consciousness

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Solution

The correct option is C non price competition and free entry
Monopolistic competition is a market situation where there are many producers selling different products from each other. There is price as well as non-price competition as every producer sells differentiated products and have competitive prices. Also, there are no entry barriers for the firm. Hence, according to Chamberlin excess capacity and higher prices in monopolistic competition is due to non price competition and free entry.

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Similar questions

Q. Give reasons or explain:

1. Single price prevails in perfect competition.

2. Price discrimination is possible under monopoly.

3. Selling cost is incurred by a firm in Monopolistic competition.

4. A monopolist can control the supply of goods.

5. Sellers and the buyers are price takers in perfect competition.

Q. A firm under monopolistic competition cannot influence market price.

Q. State whether the following statement are TRUE and FALSE.

1. There is no price discrimination under Monopolistic competition.

2. In a monopoly market, firm and industry are the same.

3. Product differentiation is not possible under perfect competition.

4. Under perfect competition, price is determined by equilibrium of demand and supply.

Q. When compared to a perfect competition, a monopolistic competitor decides to have .

Q. Fill in the blanks with appropriate alternatives given in the brackets:

1. Under perfect competition commodities are ________________ in nature. (homogeneous/ classified/ heterogeneous/ supplementary)

2. _____________ appears in a monopoly market. (product differentiation/ price discrimination/ individual differentiation/ packing differentiation)

3. The price at which demand and supply equate to each other is called _______ price. (general/ equilibrium/ short-run/ reserve)

4. In ________ market, seller creates products differentiation. (competition/ perfect/ pure/ monopolistic competition)

5. Monopolist means __________ competitive. (single seller/ several seller/ single buyer/ several buyer)

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