In which market form, new firms are barred from entering the market?
Options
APerfect competition
BOligopoly
CMonopolistic competition
DMonopoly
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Price Determination in Different MarketsPYQ - June 2023Question 72 of 20
All Questions Correct Answer
✅ Option d — Monopoly
All Options:
- APerfect competition
- BOligopoly
- CMonopolistic competition
- DMonopoly
Detailed Solution & Explanation
To determine the correct market form where new firms are barred from entering, let's analyze the characteristics of each market form.
• The key concept to understand here is the concept of barriers to entry, which refers to the obstacles that prevent new firms from entering a market.
• In a monopoly market form, there are significant barriers to entry, such as high startup costs, government regulations, or limited access to resources, that prevent new firms from entering the market.
• This is why new firms are barred from entering the market in a monopoly, as the existing firm has complete control over the market and can prevent new entrants.
• In contrast, perfect competition and monopolistic competition have low barriers to entry, allowing new firms to easily enter the market, making them incorrect options.
• Oligopoly also does not necessarily bar new firms from entering, as it is characterized by a few firms competing with each other, and new firms may still be able to enter the market if they have the necessary resources.
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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