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Business Studies

Primary Markets

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Question

All the characteristics are of monopolistic competition except _________.

A

large number of buyers and sellers

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B

freedom of entry and exit

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C

excess production capacity in long run

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D

full control over price of commodity

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Solution

The correct option is A freedom of entry and exit
Monopolistic competition refers to the competition where the market has large number of buyers and sellers who deals in differentiated products with excess production capacity in the long run and full control over the price where freedom of entry and exit of new firms is restricted by patents, investment etc.

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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 monopolist has no control over the price of the commodity.

Q. There is a large number of buyers both under monopoly and monopolistic competition.

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)

Explain the implications of the following features of perfect competition:

(a) large number of buyers and sellers

(b) freedom of entry and exit to firms

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