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Which of the following statements is true? -

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Question

Which of the following statements is true?

Options

  • Demand Curve is indeterminate under perfect competition

  • Demand Curve is indeterminate under monopoly

  • Demand Curve is indeterminate under monopolistic competition

  • Demand Curve is indeterminate under oligopoly.

MCQ

Solution

Demand Curve is indeterminate under oligopoly.

Explanation:

In an oligopolistic market, no single firm can accurately forecast its future sales. This is because every change in a competitor's price/output decision would trigger a cascade of actions, reactions, and counter-actions on the part of others. As a result, under this type of market, the nature and location of the demand curve for a firm are unknown.

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