Question

Statement (1): In monopoly, there is only one seller and many buyers.

Statement (2): Under perfect competition, firms are free to exit and enter the market at any point of time.

Options

• Statement 1 is true and Statement 2 is false.

• Statement 2 is true and Statement 1 is false.

• Both the statements are true.

• Both the statements are false.

Answer 1

Both the statements are true.

Explanation:

• Statement (1): A monopoly market structure is defined by a single seller who has complete control over the industry supply, leaving a large number of buyers with no other options.
• Statement (2): Perfect competition gives absolute freedom of entry and departure. This assures that new firms can enter the market if existing firms achieve above-average profits, while struggling enterprises can exit without experiencing any legal or economic barriers.