Question

Match the following:

Group A	Group B
Monopoly	Public monopoly
Product differentiation	Abnormal profit
Railway	Monopolistic Competition
Perfect Competition	Prof. Chamberlin
Pure Competition	Homogenous product
	Cartel
	Selling cost

Answer 1

Group A	Group B
Monopoly	Abnormal profit
Product differentiation	Monopolistic Competition
Railway	Public monopoly
Perfect Competition	Homogenous product
Pure Competition	Prof. Chamberlin

1. A monopolist has complete control on the price of the good. This means that a monopolist can make high profits by selling at high prices. He can even increase profits by controlling the supply of the good. Thus, we can say that a monopolist can make abnormal profits.
2. In monopolistic competition, the products sold by the producers are highly differentiated from each other; i.e., they are not the same or homogeneous in nature. Product differentiation is an important feature of the monopolistic type of market.
3. The Indian railways are regarded as the public monopoly because the railways in India are solely owned and controlled by the government. No other private party provides railways services in India. Hence, we can say that the Indian Railways enjoys the monopoly in the railways sector.
4. Under perfect competition, there are a large number of buyers and sellers. The commodities sold by the sellers in a perfectly competitive market are homogeneous in nature. In other words, the product of each and every firm in the market is a perfect substitute to others’ products in terms of quantity, quality, colour, size, features, etc.
5. The concept of a pure competition market was initially suggested by Professor Chamberlin. He listed four conditions necessary for a pure competition market structure:
i. Large number of buyers and sellers,
ii. Homogeneous product
iii. Free entry and exit for firms
iv. Independent decision making.