Short Answer TypeWhy are the firms said to be interdependent in an oligopoly market? Explain.
An oligopoly is a market structure in which a few firms dominate. When a market is shared between a few firms, it is said to be highly concentrated. One of the main characteristics of oligopoly market is interdependence. Firms that are interdependent cannot act independently of each other. A firm operating in a market with just a few competitors must take the potential reaction of its closest rivals into account when making its own decisions. For example, if a petrol retailer wishes to increase its market share by reducing price, it must take into account the possibility that close rivals may reduce their price in retaliation. Firms that are interdependent cannot act independently of each other. A firm operating in a market with just a few competitors must take the potential reaction of its closest rivals into account when making its own decisions.
A consumer consumes only two goods. Explain consumer's equilibrium with the help of utility analysis.
State the behaviour of marginal product in the law of variable proportions. Explain the causes of this behaviour.
Long Answer TypeExplain the conditions of consumer's equilibrium with the help of the indifference curve analysis.
From the following information about a firm, find the firms equilibrium output in terms of marginal cost and marginal revenue. Give reasons. Also find profit at this output.
|
Output (units) |
Total Revenue (Rs.) |
Total Cost (Rs.) |
|
1 |
7 |
8 |
|
2 |
14 |
15 |
|
3 |
21 |
21 |
|
4 |
28 |
28 |
|
5 |
35 |
36 |
Market of a commodity is in equilibrium. Demand for the commodity 'increases'. Explain the chain of effects of this change till the market again reaches equilibrium. Use diagram.
Short Answer Type
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