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Explain the imlication of the following. (i) Large Number of buyers under Perfect Competition. (ii) Freedom of Entry and Exit to firms under Perfect Competition (iii) "Inter-dependence between Firms" under Oligopoly (iv) 'Non-price Competition' under Oligopoly (v) Large number of Sellers' under Perfect Competition (vi) "Homogeneous Products" under Perfect Competition (vii) Barriers to Entry of New Firms' under Oligopoly (vii) 'Few Big Sellers" under Oligopoly (ix) 'Product Differentiation" under Monopolistic Competition (x) 'Perfect Knowledge' under Perfect Competition

Answer» <html><body><p></p>Solution :(i) Implication is that no individuals <a href="https://interviewquestions.tuteehub.com/tag/buyers-906447" style="font-weight:bold;" target="_blank" title="Click to know more about BUYERS">BUYERS</a> is in a position to influence the market price on its own by changing his individual demand. <br/> (ii) Implication is that when existing firms are making profits , new firm to earn just only normal profit in the profit in the long run. The opposite happens if the exisitng if the existing firms are facing losses. <br/> (ii) Implication is that an individual firm takes into consideration the likely reaction of its <a href="https://interviewquestions.tuteehub.com/tag/rival-614395" style="font-weight:bold;" target="_blank" title="Click to know more about RIVAL">RIVAL</a> firms before making a move to <a href="https://interviewquestions.tuteehub.com/tag/change-913808" style="font-weight:bold;" target="_blank" title="Click to know more about CHANGE">CHANGE</a> price or output. It is possible because it is assumed that rival firms may <a href="https://interviewquestions.tuteehub.com/tag/react-613674" style="font-weight:bold;" target="_blank" title="Click to know more about REACT">REACT</a> <br/> (iv) Non-price competition means competition between firms by means other than changing price, like free gilt, home service, customer care etc. Implication is that firms in oligopoly prefer non-price competition to avoid price-war because the firm who starts the price-war may be the ultimate loser. <br/> (v) Implication is that no single firm is in a position to influence the market price on its own by changing its own output. Thus, price remains unchanged. <br/> (iv) Implication is that no firm can charge a higher price because no buyer is willing to pay the same. Thus, market price remains the same for all the firms. <br/> (vii) Implication is that such barriers allow only a limited number of firms into oligopoly industries. Such barriers may be in the form of huge capital requirements, patent rights, availability of crucial raw materials etc. <br/> (vii) Implication is that each big seller contributes a fairly large share of total output. This gives an individual seller the power of influencing the market price by changing its own output. <br/> (ix) Implication is that buyers differentiate products of firms various as different. So, they are willing to pay different prices for the products of different firms. This product differentiation gives the power to an individual firm to influence the market price on their own. <br/> (<a href="https://interviewquestions.tuteehub.com/tag/x-746616" style="font-weight:bold;" target="_blank" title="Click to know more about X">X</a>) Knowledge by buyers further implies that no buyer is willing to pay a higher price for the product of any firm. Knowledge by sellers implies that cost of production is same for all producers.Implication is that buyers are fully aware of price in market and sellers of technique of production.</body></html>


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