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asked in Non Competitive Markets by
  1. A perfectly competitive firm is a price-taker.
  2. Product differentiation is a characteristic feature of a monopolistic competitive market,
  3. A monopolist cannot fix both the quantity that he likes to produce and the price at which he would like to sell.

1 Answer

answered by
  1. In a perfectly competitive market there are a large number of producers of a product. All of them produce a homogeneous product. Therefore, all the firms have to sell at the same price. This price is determined by industry demand and supply.
  2. In a monopolistic competitive market there is a large number of producers. But each of these producers produces a product which is somewhat different from what others do. At least, the producers make all the attempts to influence the consumer with the idea that their product is better than the product of the rival producers.
  3. A monopolist is faced with a downward sloping curve. He can sell a larger quantity at a lower price; or alternatively, he may charge a higher price and be satisfied with lower quantity. He has to make a choice between the two alternatives.

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