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Chapter 10 Solutions for Class 12 Microeconomics by Sandeep Garg

Commerce

Chapter 10 Solutions for Class 12 Microeconomics by Sandeep Garg

Class 12 Microeconomics Sandeep Garg Solutions Chapter 10 – Main Market Forms

For Microeconomics Class 12 Chapter 10 Sandeep Garg, Vedantu has drafted the solutions of the chapter along with in-depth explanations of the various concepts. These solutions can help students prepare well for the examinations as they have been made as per the recent CBSE guidelines. Thus, students can understand the pattern of the answers expected by examiners and the various marking schemes, besides the types of questions that come in the examination. All these can give students a clear idea of how they need to prepare themselves to perform well in the examinations. The solutions can be a confidence booster for many students before the exam and help them prepare their best. Hence students must download Sandeep Garg Microeconomics Solution for Class 12 Chapter 10 from Vedantu for free to guarantee better results.

Market Structure

Vedantu offers students a massive opportunity to understand the concepts of the chapter through Class 12 Sandeep Garg Solutions Main Market Forms for Microeconomics. This chapter is based on the main market forms.

Meaning and Features of Market

The term market is not used in economics to refer to a physical location. Economists describe a market as a place where the buyers and sellers meet to exchange goods or services with each other. Thus a market is described as an arrangement where buyers and sellers interact directly or indirectly to exchange goods and services.

Features of Market

As a general rule, markets refer to markets for a single commodity or set of commodities.
The term market also includes both physical and geographical locations. It encompasses a general area as well as the forces of demand and supply in that area.
For a market to exist, there must be a group of buyers and sellers. And this group of buyers and sellers must have a business relationship with each other.
In order to sell and buy efficiently, both parties must have knowledge about the market

Types of Market

There are various categories of the market like:

Perfect competition
Imperfect competition
Monopoly
Oligopoly

All these forms of the market have been well explained, citing some appropriate examples.

Perfect Competition- In economic terms, perfect competition occurs when all firms have the same product offering, market share does not influence prices, firms can enter or exit the market with no barriers, buyers have full or perfect information, and firms cannot determine prices. This means that it is a market that is entirely dominated by market forces. Imperfect competition, on the other hand, reflects current market conditions more accurately. The concept of perfect competition is just a theoretical construct, and it does not exist in reality. This is because, in the long run, producers earn no economic profits.

Perfect competition has several features like:

A huge number of sellers and buyers.
Homogeneity in products.
No presence of selling costs.
Transportation costs are absent.
Exit and entry can depend on will.
It is obvious to both buyers and sellers what the price, utility, quality, and production methods of the product are.
In a perfectly competitive market, buyers and sellers incur no transaction costs.

Monopoly and oligopoly are components of imperfect competition. It refers to the presence of only one seller selling a product in the market without the presence of other substitute sellers. Monopolistic competition is a term used to refer to competition in the market among various sellers, selling similar products. Monopolistic competition describes a type of imperfect competition in which many producers compete with each other but sell products that are different in terms of quality, price, and other factors and cannot be perfectly substituted.

Features of Monopolistic Competition

A large number of sellers- A market with monopolistic competition has a large number of sellers with a small market share.
Product differentiation- Brands in monopolistic competition try to differentiate their products to create an element of monopoly over their competitors. This ensures that their products do not have a perfect substitute.
Freedom of entry or exit- In perfect competition, companies are free to enter and exit the market as they wish.
Non-price Competition- As a result of monopolistic competition, sellers compete on factors other than price, including advertising, product development, distribution, and after-sales service.

Oligopoly is also known as 'competition among the few. Oligopoly is a market situation where few sellers are selling homogeneous products in the market. Because there are few sellers in the market, every seller can affect the behavior of other firms and others can influence their behavior. Various markets in India are oligopolists, some of which are perfect, some of which are imperfect/differentiated.

There are several features in oligopoly:

Few sellers.
Dependence among each other.
Competition does not involve money.
Product quality.
Importance of costs of selling.
The behavior of groups.

Features of Oligopoly

After a clear definition of oligopoly, we can examine its characteristics:

New Firms

In an oligopolistic market, there are a few large firms, but the exact number is not known, and there is severe competition since each firm makes up a large share of the total output.

Barriers to Entry

Oligopoly can lead to very high profits in the long term since there are many barriers to entry, such as patents, licenses, and control over raw materials. These barriers make it difficult for new companies to enter the industry.

Non-Price Competition

Because firms fear price wars in Oligopoly, they utilize non-price methods such as advertising, after-sales service, warranties, etc. This allows them to influence demand and build brand recognition.

Interdependence

Due to the powerful holdings of a few firms in the industry, each firm's prices and production decisions are affected by those of its counterparts. In an oligopoly, firms are highly interdependent. Consequently, firms determine their price and output levels by taking into account the action and the reaction of their competitors.

Selling Costs

Among firms, there is a great deal of interdependence that makes avoiding price competition and lowering selling costs essential to competing for a larger market share against rivals.

These are the main components of Class 12 Microeconomics Main Market Forms, which students need to learn well to obtain good marks. They must download the Class 12 Sandeep Garg Chapter 10 PDF now!

Solved Examples

If a firm is placed under perfect competition, what is the shape of the demand curve?

a. Vertical

b. Horizontal

c. Negatively sloped

d. Positively sloped

Ans: b. Horizontal

Which of the following is correct with respect to a price-taking firm?

a. Marginal revenue = Price

b. Marginal revenue < Price

c. Marginal revenue > Price

d. The relation between marginal revenue and price is indeterminate.

Ans: a. Marginal revenue = Price

FAQs on Chapter 10 Solutions for Class 12 Microeconomics by Sandeep Garg

1. What are the Features of Homogeneous Products?

Homogeneous products refer to a uniform price for all the products of a certain firm. The following are some of the key features of homogeneous products in the market:

The products which are sold in the market are homogeneous, which means that they are identical in all aspects like weight, size, design, colour and quality.
To the buyers, all these products which are sold by different firms seem to be equal.
The buyers cannot differentiate between the products and are thus not loyal to any particular firm. The buyer may purchase from a different firm in the future.
Since the buyers have the notion that all the products are the same, they are only willing to pay the same amount to every firm. Thus no firm can sell the product at a higher price and gain a higher amount of profit.

2. What are the Features of Perfect Knowledge Regarding the Market?

The features of perfect knowledge about the market are listed below:

Perfect knowledge means both the buyers and sellers are well informed about everything in the market.
The firms have all the necessary knowledge regarding the product market and input market while the buyers also have all the knowledge about the product market.
Buyers having perfect knowledge regarding the product market ensures uniformity in price. They are well aware of the price of the products and will not spend more than that stipulated price, which few firms can set for gathering higher profit.
Knowledge of the input market assures all the firms have similar resources to spend.
All the firms possess a similar cost structure.
Uniform price and uniform cost result in consistent profit across all the firms.

3. How Should We Prepare for Main Market Forms class 12th Economics?

This chapter is all about explaining various market forms to students and making them understand the basic concept of buyers and sellers in different market forms. When compared to other chapters in Microeconomics, this chapter is easy and interesting as well, thus scoring well is not hard. You just need to read the chapter thoroughly from Sandeep Garg Economics class 12th. Make sure you understand the difference between various market forms as most of the questions will ask about differentiation. After completing the chapter from the book, you can solve sample papers from Vedantu to analyze your preparation.

4. What is the Difference between Perfect Competition and Imperfect Competition?

Perfect competition occurs when all the factors of perfect competition are met; such a market has many buyers and sellers, and the sellers sell the same products to the buyers. Imperfect competition is the absence of one or more of the factors of perfect competition.

Perfect Competition is an idealistic state that doesn't apply in the real world. On the other hand, imperfect competition occurs in the real world.
Markets with the perfect competition will have many players, but markets with imperfect competition can have fewer to many players depending on the market structure.
When there is perfect competition, the sellers produce identical products. A difference between perfect and imperfect competition is whether the sellers offer homogeneous or differentiating products.

5. What is the Difference between Monopolistic and Oligopolistic Markets?

One major difference between monopolies and oligopolies is that monopolies refer to the kind of market where one seller dominates the entire market, while oligopolies refer to the market where there are a small number of firms or sellers.

Monopolistic competition means the firm sells a product that no other firm is going to be able to compete with. At the same time, in oligopolistic competition, the service offered or product sold is either identical to that offered by other firms or different.

There is price discrimination between consumers or customers in a monopoly, as they must pay a different price for the same or similar product. In contrast, the price will remain fixed for a longer period of time in an oligopoly.