Price Determination in Different MarketsPYQ - May 2019Question 63 of 20

Under which of the following forms of market structure does a firm have no control over the price of its product?

Options

AMonopoly

BMonopolistic competition

COligopoly

DPerfect competition

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Correct Answer

✅ Option d — Perfect competition

All Options:

AMonopoly
BMonopolistic competition
COligopoly
DPerfect competition

Detailed Solution & Explanation

To determine the correct answer, let's break down the key characteristics of each market structure. • In a market, the level of control a firm has over the price of its product depends on the market structure it operates in. • Perfect competition is a market structure where many firms produce a homogeneous product, and no single firm can influence the market price. • This is because in perfect competition, the number of firms is large, and each firm is a price taker, not a price maker. • On the other hand, monopoly, monopolistic competition, and oligopoly are market structures where firms have some level of control over the price of their products. • For example, in a monopoly, a single firm is the sole supplier of a product, giving it significant control over the price. • In monopolistic competition and oligopoly, firms also have some degree of price-setting power due to product differentiation or limited competition. • Therefore, the correct answer is perfect competition, as it is the only market structure where a firm has no control over the price of its product.

About This Chapter: Price Determination

Paper

Paper 4: Business Economics

Weightage

15%

Key Topics

Perfect Competition, Monopoly, Monopolistic, Oligopoly

This high-weightage chapter covers all four market structures: Perfect Competition, Monopoly, Monopolistic Competition, and Oligopoly. Students learn how price and output are determined under each structure, along with key concepts like Price Discrimination, Kinked Demand Curve, and the conditions of equilibrium (MR = MC).

View Official ICAI Syllabus

Exam Strategy Tip

This chapter carries the highest weightage (~15%). Focus on features of each market, the shape of AR and MR curves, and understand why firms in Perfect Competition are 'Price Takers' while Monopolists are 'Price Makers'.

Related Comparison Tables

Fixed Cost vs Variable Cost: Cost Concepts

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