Toothpaste industry is an example of:
Options
AMonopoly
BMonopolistic competition
COligopoly
DPerfect competition
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Price Determination in Different MarketsPYQ - Dec 2020Question 75 of 20
All Questions Correct Answer
✅ Option b — Monopolistic competition
All Options:
- AMonopoly
- BMonopolistic competition
- COligopoly
- DPerfect competition
Detailed Solution & Explanation
To determine the correct market structure of the toothpaste industry, let's analyze the characteristics of each option.
• The toothpaste industry has many firms, such as Colgate, Pepsodent, and Close-up, which rules out monopoly.
• Each firm produces a differentiated product, with unique features, packaging, and branding, which attracts specific consumer groups.
• There are many buyers and sellers in the market, and no single firm has the power to influence the market price, which is a key feature of monopolistic competition.
• The presence of product differentiation and non-price competition, such as advertising, also supports the idea of monopolistic competition.
The correct answer is monopolistic competition because it exhibits the characteristics of many firms, free entry and exit, and non-price competition.
In contrast, oligopoly is incorrect because it typically involves a few large firms, and perfect competition is incorrect because it requires homogeneous products, which is not the case in the toothpaste industry.
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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