OPEC is an example of:
Options
AMonopolistic competition
BMonopoly
COligopoly
DPerfect
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Price Determination in Different MarketsPYQ - June 2022Question 71 of 20
All Questions Correct Answer
✅ Option c — Oligopoly
All Options:
- AMonopolistic competition
- BMonopoly
- COligopoly
- DPerfect
Detailed Solution & Explanation
To determine the correct answer, let's break down the concept of OPEC and the given options.
• OPEC, or the Organization of the Petroleum Exporting Countries, is a group of countries that coordinate to set production levels and prices for oil.
• This coordination among a few large producers is a key characteristic of an oligopoly, a market structure in which a small number of firms compete with each other.
• In an oligopoly, firms may engage in cooperative behavior, such as price fixing or output restriction, to increase their profits.
• OPEC's actions, such as setting production quotas and influencing global oil prices, fit this definition of oligopoly.
• In contrast, monopolistic competition involves many firms producing differentiated products, which is not the case with OPEC.
• Monopoly, on the other hand, involves a single firm supplying the entire market, which is also not the case with OPEC, as there are multiple oil-producing countries involved.
• Therefore, OPEC is an example of an oligopoly, as it consists of a small group of large producers that coordinate their actions to influence 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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