1.

Discuss the importance of the following factors in determing the nature of the market you have studied: (a) Number of firms, Selling costs, (c ) Price Discrimination, (d) Interdependence of firms.

Answer» <html><body><p></p>Solution :(a) When the number of firms is very large, it is a <a href="https://interviewquestions.tuteehub.com/tag/case-910082" style="font-weight:bold;" target="_blank" title="Click to know more about CASE">CASE</a> of perfect <a href="https://interviewquestions.tuteehub.com/tag/competition-423521" style="font-weight:bold;" target="_blank" title="Click to know more about COMPETITION">COMPETITION</a>. When the number of firms is no as large as under perfect competition, the situation is that of monopolistic competition. When there are only a few firms in <a href="https://interviewquestions.tuteehub.com/tag/themarket-1408348" style="font-weight:bold;" target="_blank" title="Click to know more about THEMARKET">THEMARKET</a>, it is a case of oligopoly. When there is only one firm in the market,it is a case of monopoly <br/> (b) Heavy selling cost arise under oligopoly and monopolistic competion. Under monopoly low selling costs are incuried for <a href="https://interviewquestions.tuteehub.com/tag/informative-499229" style="font-weight:bold;" target="_blank" title="Click to know more about INFORMATIVE">INFORMATIVE</a> purposes only and there is no selling cost are incurred for information purpose only by and there is no selling cost under perfect competition,<br/> (c )Price discrimination is possible only under monopoly <br/> (d) The interdependence of firms is a characteristic which beiangs to oligopoly</body></html>


Discussion

No Comment Found

Related InterviewSolutions