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Business Economics · Class 12 Commerce

Ch 4Market Structures and Price Determination — Class 12 Business Economics, concept-first.

In everyday language a market means a particular place where goods are bought and sold. In economics, however, a market does not refer to a place at all. It refers to the whole set of buyers and sellers who are in close contact with one another for the purchase and sale of a commodity, so that the price of that commodi…

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Key concepts

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Price and Output under Perfect Competition

Under perfect competition many firms sell a homogeneous product with free entry, so a single price rules and each firm is a price taker with a horizontal AR curve where .

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Chapter contents

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1

Meaning of Market and Its Forms

In everyday language a market means a particular place where goods are bought and sold. In economics, however, a market does not refer to a place at all.

2

Perfect Competition: Features and Price–Output Determination

Perfect competition is a market form in which there are a very large number of buyers and sellers dealing in a homogeneous product, with free entry and exit and perfect knowledge, so that a single uni…

3

Monopoly: Features and Price–Output Determination

Monopoly (from mono = single, poly = seller) is a market in which there is a single seller of a commodity that has no close substitute, with strong barriers to the entry of new firms.

4

Monopolistic Competition: Features and Price–Output Determination

Monopolistic competition is a market with a large number of sellers offering closely substitutable but differentiated products.

5

Effect of Shifts in Demand and Supply on Equilibrium

In a competitive market the equilibrium price and equilibrium quantity are settled where the demand curve DD and the supply curve SS intersect.

Sample & Board Papers

Sample papers and previous-year board questions for this subject.

+Show 8 questions8 questions
  1. Q1The unique feature of Monopolistic competition is (a) Single seller (b) Single price (c) Product differentiation (d) Barriers to entry into…Preview
  2. Q2Examine the correctness of the following statement. Correct it if necessary, without changing the portion underlined : Under Oligopoly there…Preview
  3. Q3Answer within 30 words : What is Monopoly?Preview
  4. Q4Explain how price is determined under perfect competition.Preview
  5. Q5What will happen to price, when demand increases but supply remains constant : (a) Price remains constant (b) Price increases (c) Price decr…Preview
  6. Q6Examine the correctness of the following statement and correct it if incorrect, without changing the underlined portion : In monopolistic co…Preview
  7. Q7What is monopolistic competition ?Preview
  8. Q8Explain how price is determined under perfect competition.Preview

More questions

12 Q
+Show 2 questions2 questions
  1. Q1Under perfect competition, the demand (AR) curve faced by an individual firm is: (a) downward sloping (b) upward sloping (c) a horizontal st…Free
  2. Q2A firm is in equilibrium (maximises profit) at the level of output where: (a) AR = AC (b) MR = MC and MC is rising (c) TR is maximum (d) AC…Preview
+Show 3 questions3 questions
  1. Q3Define market in the economic sense and state any two bases on which markets are classified.Free
  2. Q4Distinguish between perfect competition and monopoly on the basis of (i) number of sellers, (ii) nature of product, and (iii) shape of the A…Preview
  3. Q5What is meant by 'excess capacity' under monopolistic competition? Why does it arise?Preview
+Show 3 questions3 questions
  1. Q6Explain the features of perfect competition and show how price and output are determined for a competitive firm in the short run and the lon…Free
  2. Q7How does a monopolist determine the price and output of his product? Explain with the help of a diagram, and state why he can earn supernorm…Preview
  3. Q12Explain the main features of monopolistic competition and describe how a firm reaches long-run equilibrium under it.Preview
+Show 4 questions4 questions
  1. Q8In a competitive market the demand and supply for a commodity are given by $Q_d = 100 - 2P$ and $Q_s = 20 + 2P$, where P is price in rupees…Free
  2. Q9Continuing from the previous market ($Q_s = 20 + 2P$), suppose demand rises to $Q_d = 140 - 2P$. Find the new equilibrium and state the effe…Free
  3. Q10A monopolist faces the demand curve $P = 20 - Q$ and has a constant marginal cost of $MC = 4$. Find the profit-maximising output and price.Preview
  4. Q11A firm under perfect competition sells its output at the market price of ₹10 per unit. Its total cost is $TC = Q^{2} + 2Q + 25$. Find the pr…Preview