Cartels are a feature of:
Options
APerfect competition
BMonopoly
COligopoly
DMonopolistic competition
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Price Determination in Different MarketsPYQ - Nov 2020Question 78 of 20
All Questions Correct Answer
✅ Option c — Oligopoly
All Options:
- APerfect competition
- BMonopoly
- COligopoly
- DMonopolistic competition
Detailed Solution & Explanation
To determine the correct answer, let's break down the concept of cartels and the given options.
• Cartels are agreements between firms to control prices, limit production, or divide markets, which is a key feature of oligopolistic markets.
• In an oligopoly, a few large firms dominate the market, and they may form cartels to reduce competition and increase profits.
• This is in line with the definition of oligopoly, where a small number of firms compete with each other, and the actions of one firm can affect the others.
The correct answer is right because cartels are often formed in oligopolistic markets where there are a few large firms that can coordinate their actions.
On the other hand, perfect competition and monopolistic competition are market structures where firms have little or no ability to influence prices, making it difficult for them to form cartels.
For example, in perfect competition, there are many small firms, and no single firm can influence the market price, so cartels are unlikely to form.
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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