Q.Which of the following involves maximum exploitation of consumers ?

Absence of competition prevails under monopoly — option (b).

Market forms differ by the number of sellers and the degree of competition:

• Perfect competition — very many sellers; competition is at its maximum.
• Monopoly — a single seller of a product with no close substitutes and strong entry barriers. With no rival firms, there is no competition at all.
• Duopoly — two sellers; competition exists between the two. …

Consumer exploitation is maximum under Monopoly, so the answer is option (d).

Under monopoly there is a single seller of a product that has no close substitute, and strong barriers keep new firms out. Because the monopolist faces no competition, it can restrict output and charge a much higher price than under competition, and may even practise price discrimination. This gives it the maximum power to exploit consumers.

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