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Questions
Producers in a monopoly are price makers. Briefly explain.
Why is a monopoly firm called a price-maker?
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Solution
- In a monopoly, manufacturers are called price makers since they have massive market power due to the lack of competition.
- A monopolist is the sole manufacturer of a specific product or service, meaning no close substitutes exist.
- This absence of competition allows the monopolist to establish the product's price rather than being forced to accept a market-determined price as under perfect competition.
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RELATED QUESTIONS
Non-price competition is ______.
In which type of market price discrimination is practiced? Explain with an example.
Following is not the feature of perfect competition:
Indian Oil Corporation Limited is an example of a/an ______.
Match the following and select the correct option.
| Column I | Column II | ||
| (i) | Perfectly elastic demand | (A) | Oligopoly |
| (ii) | Less elastic demand | (B) | Monopolistic competition |
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| Units of output sold | Price offered by seller A in ₹ |
| 30 | 10 |
| 40 | 10 |
| 50 | 10 |
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Reason (R): A monopolist can charge different prices in different markets because different sets of consumers - rich and poor - have different price elasticity of demand for the monopolist's product.
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