ECONOMICS
COMPETITION AND MARKET STRUCTURES
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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maintain existing prices.
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raise their prices.
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go out of business.
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lower their prices.
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Detailed explanation-1: -A reduction in competition across many markets in an economy could lead to higher prices generally. Inflation, on the other hand, does not measure whether prices are high. 3 Instead, it typically measures the annual percentage change in the average price level of an economy.
Detailed explanation-2: -A monopoly is the type of imperfect competition where a seller or producer captures the majority of the market share due to the lack of substitutes or competitors. A monopolistic competition is a type of imperfect competition where many sellers try to capture the market share by differentiating their products.
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: -A good example of an Oligopoly is the cold drinks industry. In India, there are a handful of firms who manufacture cold drinks. These firms sell homogeneous as well as differentiated products in the market.