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In a perfectly competitive market, a firm cannot influence the market price by its own action and thus can sell any amount at a price given by the market. Such a firm is called a price taker firm.

Firm is industry:

• A firm is an independent unit of production, whereas an industry is the collection of the firms producing same products.
• However in monopoly, the producer and the seller are same. So, the concept of collection of firms does not exist and single firm behaves as a whole industry.

No transportation expense:

• There are numerous buyers and sellers in perfect competition.
• The expenses of transportation are so nominal as compared to the total expense that they are not counted.
• Thus zero transportation expense is an important characteristic of the perfect competition.

In this market, there is no restriction on the entry and exit of the firms. When the firms are gaining abnormal profits, new firms may freely enter the market. Similarly, when the firms are suffering from abnormal losses, they are free to – exit the market.

Interdependence:

• Under oligopoly the number of setters or producers is very few so they strive to gather information about other setters or producers. Setters compete on the basis of price or product, they decide price or variety based on the actions of their competitors. This is called interdependence In oligopoly market there are very few sellers and producers. So, the sellers or producers can easily gain important information about other sellers or producers.
• The sellers and producers then pay special attention on the quality and type of the product to compete with other similar products and attract consumers. For example, producers and sellers of television, car, etc. follow similar practices of discount, features, etc.
• The firms decide price, quality or type of its product, based on the behaviour of the competitors and so they are interdependent.

Price-discrimination:

• The policy of a monopolist to charge different prices from customers of different categories/types in order to increase his demand is called price discrimination.
• Due to absence of competition, the seller can charge different prices on the same product, depending on its use or form.
• Thus, the seller adopts the concept of price discrimination and earns higher profit. For example, doctor, lawyer, etc. can charge different fees for similar problems

The four factors of production, namely land, capital, labour and entrepreneur are dynamic and mobile in both physical forms – as well as in terms of profession and usage.

Monopoly:

• A market structure where in there is only one seller and numerous buyers is called monopoly. .
• ‘Perfect Market’ and ‘Monopoly’ are two completely opposite theories. Just like perfect market, monopoly is also an imaginary concept. The monopoly observed is actually imperfect monopoly.
• Monopoly has originated from the Greek words, ‘Monos’ which means ‘Single’ and ‘Polein’ means ‘Seller’. So, the term ‘Monopoly’ means a market having only one seller.

Definition:

• According to Prof. Chamberlin, “When the product supply is controlled only by a single enterprise, it is Monopoly.”
• According to Prof. Stigler, “Only one enterprise is the seller of the goods or products.”

Identical products:

• Products that have similar features, form, shape, colour, taste, weight, quality, etc. are called identical products. Since these products have a lot of similarity they are called as identical or similar products. Identical ‘ products can be used as substitutes of each other.
• In perfect competition market, the producers or sellers cannot set different prices for identical products because the buyers are not ready to pay different prices for products having similar characteristics and quality.

Correct option is (A) Perfect competition

Correct option is (C) Monopolistic competition

• The concept of selling cost is not seen in monopoly or perfect competition.
• In monopolistic competitive market, the sellers try to attract the consumers by spending on advertisement, discounts, commission, attractive packaging, etc. All these form a part of selling expenses.
• Selling cost creates product difference in the market which then gives a particular identity to a product. For example, companies manufacturing mobile phones, soaps, etc. try to create unique identity through selling costs.
• Such a concept does not exist in perfect competition or monopoly. Hence, selling cost is a typical characteristic of monopolistic market.

Correct option is (C) Monopoly

Correct option is (C) Monopolistic competition

Correct option is (C) Agriculture sector

Correct option is (D) Both (B) and (C)

Correct option is (C) Perfect competition

Correct option is (B) Bulk market

Correct option is (D) Perfect competition

Important definitions of perfect competition:

(a) According to Mrs. Robinson ‘Perfect competition exists where the demand of product of the producer totally depends on its price.’

(b) According to Prof. Leftwich, ‘Perfect competition is a market system where there are many firms that sell identical products, with no firm large enough to influence the market price.’