A market situation when many firms sell similar but not identical products is termed as
- A.perfect competition
- B.imperfect competition
- C.monopolistic competition
- D.oligopoly
Correct answer
Explanation
The correct answer is C, monopolistic competition. Monopolistic competition is a market with many sellers whose products are close substitutes but not exactly the same, such as different brands of soap, toothpaste or restaurant meals. Each firm uses branding, packaging, quality and advertising to set its product apart, so it has some control over its own price, while free entry and exit keep its long-run profits normal. The idea was developed by the American economist Edward Chamberlin in 1933. Option A is wrong because in perfect competition all firms sell an identical (homogeneous) product and none can influence the price. Option B is wrong because imperfect competition is only the broad heading that covers monopoly, oligopoly and monopolistic competition, not the name of this particular market. Option D is wrong because an oligopoly has only a few large sellers, such as telecom or aircraft makers, who watch each other's moves. Exam tip: identical product, perfect competition; differentiated product with many sellers, monopolistic competition; few sellers, oligopoly.
Practice Questions
View allUnder normal downward sloping demand curve and fully elastic supply curve of a commodity, an exogenous decrease in demand would lead to
- A.increase in equilibrium price and quantity
- B.decrease in equilibrium price and quantity
- C.decrease in equilibrium quantity and no change in price
- D.increase in equilibrium price and no change in quantity
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A fully (perfectly) elastic supply curve is a horizontal line: sellers will supply any quantity at one fixed price and nothing below it.
Read the full explanation →Which of the following are included in M1 definition of money for the Indian economy? 1. Reserves 2. Currency 3. Time deposits 4. Demand deposits Select the correct answer using the code given below.
- A.1 and 3 only
- B.2 and 3
- C.2 and 4
- D.1, 3 and 4
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M1, called narrow money, is the most liquid measure of money supply in India. It is made up of currency with the public, demand deposits with banks, and other deposits with the Reserve Bank of India.
Read the full explanation →Level of per capita GDP depends upon which of the following? 1. Proportion of population in the working age 2. Work participation rate 3. Per worker productivity Select the correct answer using the code given below.
- A.3 only
- B.1 and 3 only
- C.1 and 2 only
- D.1, 2 and 3
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Per capita GDP is total output divided by total population, and it can be broken into three parts that multiply together.
Read the full explanation →Which of the following components of Central Government taxes on petroleum products is/are not shareable with the States? 1. Basic Excise Duty 2. Additional Excise Duty 3. Special Additional Excise Duty Select the correct answer using the code given below.
- A.1 and 2 only
- B.1, 2 and 3
- C.3 only
- D.2 and 3 only
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The Union excise levied on petrol and diesel has three parts. Basic Excise Duty is an ordinary Union tax, so it goes into the divisible pool and a share of it reaches the states as recommended by the Finance Commission under Article 270.
Read the full explanation →Which of the following statements with regard to the Report of Tendulkar Committee (2009) on poverty estimates is/are correct? 1. The Committee had used an all-India urban poverty line basket as a reference to derive both rural and urban poverty levels. 2. The Committee had anchored the poverty line to the official food calorie norms. Select the correct answer using the code given below.
- A.1 only
- B.2 only
- C.Both 1 and 2
- D.Neither 1 nor 2
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The Suresh Tendulkar expert group, which reported to the Planning Commission in 2009, deliberately moved away from the old calorie-based poverty line.
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