ECONOMICS (CBSE/UGC NET)

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ECONOMICS

COMPETITION AND MARKET STRUCTURES

Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
Barry and two associates have been operating a business that is not going well. Barry is stressed out because the company is over $200, 000 in debt and he knows that if it goes out of business, he and his two associates will have to pay it out of their own pockets. It sounds like Barry and his two associates have a
A
partnership.
B
corporation.
C
sole proprietorship.
D
stock.
Explanation: 

Detailed explanation-1: -In a perfect competition model, there are no monopolies. This kind of structure has a number of key characteristics, including: All firms sell an identical product (the product is a commodity or homogeneous). All firms are price takers (they cannot influence the market price of their products).

Detailed explanation-2: -A monopoly is a firm who is the sole seller of its product, and where there are no close substitutes. An unregulated monopoly has market power and can influence prices. Examples: Microsoft and Windows, DeBeers and diamonds, your local natural gas company.

Detailed explanation-3: -Economic market structures can be grouped into four categories: perfect competition, monopolistic competition, oligopoly, and monopoly. The categories differ because of the following characteristics: The number of producers is many in perfect and monopolistic competition, few in oligopoly, and one in monopoly.

Detailed explanation-4: -In a perfectly competitive market, each firm is a price taker, meaning that it has no control over the price.

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