NCERT Class 12 Economics Chapter 6 Non Competitive Markets Extra Questions and Answers
Class 12 Economics Chapter 6 Extra Inside Questions and Answers – Non Competitive Markets. Here in this Page Class XII Students can Learn Extra Questions & Answer 6th Chapter Economics fully Inside.
We Provided Here Non Competitive Markets Economics Chapter 6 Long Answer Type Question, MCQ Questions & Answer, Short Answer Type Questions (2 or 3 marks), and Very Short answer Type Question (1 marks) Solution.
Class 12 Economics Chapter 6 Inside based Question
Economics Chapter 6 Non Competitive Markets Class 12 Inside 6 Marks, 3 marks, 2 Marks & And 1 Marks Important Questions and Answers.
1.) which conditions are satisfied by the perfect competition market?
Ans – The perfect competition market structure is approximated by a market satisfying the following conditions:
(i) there exist a very large number of firms and consumers of the commodity, such that the output sold by each firm is negligibly small as compared to the total output of all the firms combined, and similarly, the amount purchased by each consumer isextremely small in comparison to the quantity purchased byall consumers together;
(ii) firms are free to start producing the commodity or to stop production; i.e., entry and exit is free
(iii) the output produced by each firm in the industry is indistinguishable from the others and the output of any other industry cannot substitute this output; and
(iv) consumers and firms have perfect knowledge of the output, inputs and their prices.
2.) what is mean by Monopoly and oligopoly Market ?
Ans -Such a market, where there is one firm and many buyers is called a monopoly. A market that has a small number of large firms is called an oligopoly.
3.) Distinguished between perfect competition market and Monopoly market
perfect competition market |
Monopoly market |
In perfect competition market there are large number of seller in market . | In Monopoly Market there is only one seller in market |
Free entry and exit | In Monopoly market there is entry bearers |
In this market seller are price takers | In this market seller are price Makers. |
4.) Monopoly firm’s facing downward demand curve. Explain
Ans – The market demand curve shows the quantities that consumers as a whole are willing to purchase at different prices. As per demand curve consumers are willing to buy a lower quantity at high price and on other hand consumers are willing to buy a higher quantity at lower price .That is, price in the market affects the quantity demanded by the consumers. This is also expressed by saying that the quantity purchased by the consumers is a decreasing function of the price. For the monopoly firm, the above argument expresses itself from the reverse direction. The monopoly firm’s decision to sell a larger quantity is possible only at a lower price. Conversely, if the monopoly firm brings a smaller quantity of the commodity into the market for sale it will be able to sell at a higher price. Thus, for the monopoly firm, the price depends on the quantity of the commodity sold. The same is also expressed by stating that price is a decreasing function of the quantity sold. Thus, for the monopoly firm, the market demand curve expresses the price that consumers are willing to pay for different quantities supplied. This idea is reflected in the statement that the monopoly firm faces the market demand curve, which is downward sloping.
5.) What is mean by total revenue , average revenue and marginal revenue in Monopoly market.
Ans -i.) Total revenue -The total revenue (TR) received by the firmfrom the sale of the commodity equals theproduct of the price and the quantity sold.
ii.) Average revenue -The revenue received by the firm per unit ofcommodity sold is called theAverage Revenue (AR).
iii.) Marginal revenue -The change in TR due to the sale of anadditional unit is termed MarginalRevenue (MR).
6.) What is the effect on profit of Monopoly firm Compare to perfect competition in long run .
Ans – In perfect competition market firm always earn normal profit due to free exit and entry. That was due to the fact that if profits earned by firms were Super normal, more firms would enter the market and the increase in output would bring the price down, thereby decreasing the earnings of the existing firms. Similarly, if firms were facing losses, some firms would close down and the reduction in output would raise prices and increase the earnings of the remaining firms. The same is not the case with monopoly firms. Since other firms are prevented from entering the market, the profits earned by monopoly firms do not go away in the long run.
7.) Explain Critical Views related to Monopoly market.
Ans -Following are the Critical views about Monopoly whichexpressed by economists :
1.) First, it can be argued that monopoly of the kind describedcannot exist in the real world. This is because all commodities are, in asense, substitutes for each other. This in turn is because of the fact that all thefirms producing commodities, in the final analysis, compete to obtain the incomein the hands ofconsumers.
2.) Another argument is that even a firm in a pure monopoly situation is neverwithout competition. This is because the economy is neverstationary. Newcommodities using new technologies are always coming up, which are closesubstitutes for the commodity producedby the monopoly firm. Hence, themonopoly firm always hascompetition in the long run. Even in the short run,the threat of competition is always present.
3.) Still another view argues that the existence of monopolies may be beneficialto society. Since monopoly firms earn large profits, they possess sufficient fundsto take up research and development work, something which the small perfectlycompetitive firm is unable to do. By doing such research, monopoly firms areable to produce better quality goods, or goods at lower cost, or both. While it istrue that monopolies make supernormal profits, they may benefit consumersby lowering costs.
8.) In case of oligopoly firms are in the position to affect the supply of market.
Ans – Yes , In the oligopoly market there are a few firms, each firm is relatively large when compared to the size of the market. As a result each firm is in a position to affect the total supply in the market, and thus influence the market price. For example, if thetwo firms in a duopoly are equal in size, and one of them decides to double its output, the total supply in the market will increase substantially, causing the price to fall. This fall in price affects the profits of all firms in the industry.
For more ⇓
- Theory of consumer behavior Extra Questions
- Production and Costs Extra Questions
- The Theory of the firm under Perfect Competition Extra Questions
- Market Equilibrium Extra Question
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