Types of Non-Competitive Markets with Examples and MCQs
Non-competitive markets are a core concept in economics, especially important for Class 11 and Class 12 board preparation. In this topic, students learn how some firms can influence prices, unlike in perfectly competitive markets. Grasping this chapter is essential for scoring high in exams and for real-world economic understanding.
| Market Structure | Key Features | Examples |
|---|---|---|
| Monopoly | Single seller, price maker, high barriers to entry | Indian Railways, Microsoft Windows in OS |
| Oligopoly | Few dominant firms, interdependence, non-price competition | Telecom (Jio, Airtel, Vi), Car manufacturers |
| Monopolistic Competition | Many firms, product differentiation, some price control | Toothpaste brands, Restaurants |
Non-Competitive Markets: Meaning and Importance
Non-competitive markets are those where firms can affect the market price due to limited competition. This happens when there are barriers to entry or product differentiation. For commerce students, understanding non-competitive markets builds a strong base for exam questions and real-world analysis.
Types of Non-Competitive Markets
There are three main forms: monopoly, oligopoly, and monopolistic competition. Each type presents unique features regarding the number of sellers, market control, and nature of competition. Recognizing these differences helps in both exam questions and case study applications.
Monopoly
A monopoly exists when a single seller dominates the market, setting prices without competition. Barriers to entry are very high, and products offered are unique or without close substitutes.
Oligopoly
Oligopoly involves a few large firms controlling the market. Firms in oligopoly watch and react to each other, leading to price rigidity—a concept often explained by the kinked demand curve. Examples include the Indian telecom and automobile sectors.
Monopolistic Competition
Here, many sellers offer differentiated products and have some control over prices. The market is competitive but products differ in branding and features. Fast food chains and cosmetic brands are good examples.
Key Features of Non-Competitive Markets
- Price-making power due to limited competition
- Barriers to entry restrict new firms
- Non-price competition (advertising, branding)
- Unique or differentiated products
- Potential for long-run abnormal profits
Real-World Examples of Non-Competitive Markets
- Monopoly: Google in search engines, IRCTC for online railway bookings
- Oligopoly: Indian telecom (Jio, Airtel, Vi), Soft drink companies (Coke, Pepsi)
- Monopolistic Competition: Mobile phone brands, Retail malls
Price and Output Determination in Non-Competitive Markets
In monopoly, the single seller decides the price by controlling supply. Oligopolies rely on strategic decisions, and may avoid price wars. In monopolistic competition, firms use brand differentiation to gain customer loyalty and set slightly higher prices.
MCQs on Non-Competitive Markets (Class 12 Economics)
| Question | Options | Answer |
|---|---|---|
| 1. Which market structure is characterized by a single seller and no close substitutes? |
A) Perfect Competition B) Monopoly C) Oligopoly D) Monopolistic Competition |
B) Monopoly |
| 2. In which market type do firms experience the kinked demand curve? |
A) Monopoly B) Monopolistic Competition C) Oligopoly D) Perfect Competition |
C) Oligopoly |
| 3. What is the main feature of monopolistic competition? |
A) Homogeneous product B) Few firms C) Product differentiation D) Single seller |
C) Product differentiation |
| 4. Which of these is a clear example of an oligopoly in India? |
A) Sugar mills B) Mobile telecom network providers C) Wheat farmers D) Local vegetable shops |
B) Mobile telecom network providers |
| 5. Which market structure allows entry and exit of firms with least barriers? |
A) Monopoly B) Oligopoly C) Perfect Competition D) Monopolistic Competition |
C) Perfect Competition |
| 6. Price discrimination is most likely to occur in: |
A) Monopoly B) Oligopoly C) Perfect Competition D) None of the above |
A) Monopoly |
| 7. Which market has mutual interdependence among competitors? |
A) Oligopoly B) Monopoly C) Monopolistic Competition D) Perfect Competition |
A) Oligopoly |
| 8. The Indian Railways is the best example for: |
A) Oligopoly B) Monopoly C) Perfect Competition D) Monopolistic Competition |
B) Monopoly |
| 9. The presence of branded soaps in the market is an example of: |
A) Monopoly B) Oligopoly C) Monopolistic Competition D) Perfect Competition |
C) Monopolistic Competition |
| 10. Which statement is NOT correct about monopoly? |
A) Single seller B) No close substitute C) Free entry and exit D) Price-maker |
C) Free entry and exit |
Quick Revision Notes: Non-Competitive Markets
- Monopoly: One seller, high price control, barriers to entry.
- Oligopoly: Few large firms, interdependence, non-price competition.
- Monopolistic Competition: Many firms, product differentiation, some price control.
- Non-competitive markets = Imperfect competition.
- Real-world use: Pricing, strategic firm decisions, CBSE/board exam focus.
Download and Resources
Download more MCQs, revision notes, and diagrams related to non-competitive markets at Vedantu for exam success. For further learning, visit topics like Types of Market Structures and Kinked Demand Curve.
- CBSE/NCERT Non-Competitive Markets Solutions
- Market Meaning and Classification
- Perfect Competition Price Determination
- Revenue Concepts in Economics
At Vedantu, we make non-competitive markets easy to understand with clear explanations, plenty of examples, and well-structured MCQs. This topic is vital for board exam preparation and forms the foundation for advanced economic analysis in higher studies and business practices.
FAQs on Non-Competitive Markets: MCQs, Explanations & Key Concepts
1. What are non-competitive markets?
Non-competitive markets are economic structures where individual sellers or groups can significantly influence prices. This contrasts with competitive markets where many sellers have little individual price control. Key characteristics often include barriers to entry, price-making behavior, and imperfect information.
2. What are some examples of non-competitive markets?
Several market structures exemplify non-competitive situations. These include:
- Monopoly: A single seller dominates the market (e.g., a utility company).
- Oligopoly: A few large firms control the market (e.g., the automotive industry).
- Monopolistic Competition: Many firms offer differentiated products (e.g., restaurants).
3. What are the main types of non-competitive market structures?
The primary types of non-competitive markets are monopoly, oligopoly, and monopolistic competition. Each features unique characteristics impacting price determination and output levels. Understanding their differences is crucial for CBSE and board exams.
4. How do non-competitive markets determine prices?
Unlike competitive markets where price is determined by supply and demand, non-competitive markets allow firms to influence prices. Monopolies can set prices to maximize profits, while oligopolies might engage in collusion or price leadership. Monopolistic competition involves some price control due to product differentiation.
5. Where can I download MCQs on non-competitive markets with answers in PDF?
Many educational websites offer downloadable MCQs on non-competitive markets with answers in PDF format. These resources are ideal for last-minute revision and self-assessment before board exams. Look for resources aligned with the CBSE syllabus for class 11 and 12.
6. What is monopolistic competition?
Monopolistic competition is a market structure characterized by many firms offering similar but differentiated products. Firms have some control over pricing due to product differences but face competition from substitutes. This is a key concept for understanding non-competitive markets and market structures.
7. What are 3 types of non-competitive markets?
Three main types of non-competitive markets are:
- Monopoly (single seller)
- Oligopoly (few sellers)
- Monopolistic competition (many sellers with differentiated products)
8. How do non-competitive markets impact consumer welfare?
Non-competitive markets can negatively impact consumer welfare. Higher prices, restricted output, and less product variety are potential consequences. Understanding these effects is crucial for applying market structure knowledge to real-world scenarios.
9. What is the difference between competitive and non-competitive market structures in board questions?
Board questions often test the ability to distinguish between competitive and non-competitive market structures. Competitive markets (perfect competition) have many buyers and sellers, homogeneous products, and free entry/exit. Non-competitive markets have fewer sellers, differentiated products, and barriers to entry. Focus on the differences in price determination, market power, and consumer welfare.
10. Why does the kinked demand curve apply in oligopoly but not in monopoly?
The kinked demand curve model explains price rigidity in oligopolies, where firms are interdependent and react to each other's pricing decisions. In a monopoly, there's no direct competitor, so the firm's demand curve is not kinked. The model doesn't accurately reflect a monopolist's behaviour since they face a regular, downward-sloping demand curve, unlike the kinked one in an oligopoly.
11. What are the features of monopoly/oligopoly?
Monopoly features include a single seller, high barriers to entry, price-making power, and potentially significant profits. Oligopoly features several large firms with significant market share, high barriers to entry, potential for collusion or price wars, and interdependent pricing decisions. Knowing these features helps differentiate between these non-competitive market structures.
