The structure of the cold drink industry in India is best described as:
Options
APerfectly competitive
BMonopolistic
COligopolistic
DMonopolistic competition
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Price Determination in Different MarketsPYQ - Dec 2021Question 69 of 20
All Questions Correct Answer
✅ Option c — Oligopolistic
All Options:
- APerfectly competitive
- BMonopolistic
- COligopolistic
- DMonopolistic competition
Detailed Solution & Explanation
To determine the structure of the cold drink industry in India, we need to consider the characteristics of different market structures.
• The cold drink industry in India has a few large players, such as Coca-Cola and Pepsi, which suggests that it is not perfectly competitive, as perfect competition requires many firms.
• The presence of these few large players also indicates that the industry is not monopolistic, as a monopoly would have only one firm.
• The cold drink industry in India is characterized by a small number of firms, product differentiation, and non-price competition, which are the key features of an oligopolistic market structure.
• According to oligopoly theory, a few firms dominate the market, and their actions can affect the market price and output, which is the case in the cold drink industry in India.
The correct answer is oligopolistic because the industry has a small number of large firms that compete with each other through product differentiation and advertising.
• Perfectly competitive and monopolistic market structures do not fit the characteristics of the cold drink industry in India, as there are multiple firms and no single firm has complete control over the market.
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 SyllabusExam 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'.
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More Questions from Price Determination in Different Markets
Under which of the following forms of market structure does a firm have no control over the price of its product?
A firm encounters its "shutdown point" when:
Kinked demand curve hypothesis is designed to explain in context of oligopoly
Which of the following is not a characteristic of a "Price Taker"?
Price discrimination will be profitable only if the elasticity of demand in different markets is:
Which of the following is not an essential condition of pure competition?
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