Question : Assertion: Monopolistic competition is characterized by many firms selling similar, but slightly differentiated products.
Reason: Product differentiation in monopolistic competition allows firms to have some control over prices.
Option 1: Both the assertion and reason are true, and the reason is a correct explanation of the assertion.
Option 2: Both the assertion and reason are true, but the reason is not a correct explanation of the assertion.
Option 3: The assertion is true, but the reason is false.
Option 4: The assertion is false, but the reason is true.
Correct Answer: Both the assertion and reason are true, and the reason is a correct explanation of the assertion.
Solution : The correct answer is (a) Both the assertion and reason are true, and the reason is a correct explanation of the assertion.
In monopolistic competition, the assertion that many firms sell similar but slightly differentiated products is true. Each firm in a monopolistically competitive market offers products that are distinct in some way from the products of other firms. These differences could be based on branding, quality, design, features, or other factors. While the products are not identical, they are close substitutes, leading to competition among the firms.
The reason provided is also true. The differentiated products in monopolistic competition give firms some degree of market power. By offering unique features or attributes, firms can create a perceived difference in the eyes of consumers, enabling them to exercise some control over prices. However, this control is limited compared to a monopoly, as there are still close substitutes available from other firms.
Therefore, both the assertion and reason are true, and the reason correctly explains why product differentiation in monopolistic competition allows firms to have some control over prices.
Question : Assertion: An oligopoly market structure is characterized by a few large firms dominating the market.
Reason: Oligopolistic firms tend to engage in non-price competition, such as advertising and product differentiation.
Question : Assertion: Liberalization reforms aimed to promote competition in the industrial sector.
Reason: Increased competition encourages innovation and efficiency.
Option 1: Both assertion and reason are true, and the reason is the correct explanation of the assertion.
Option 2: Both assertion and reason are true, but the reason is not the correct explanation of the assertion.
Option 3: Assertion is true, but the reason is false.
Option 4: Assertion is false, but the reason is true.
Question : Assertion: Liberalization reforms aimed to reduce government control in the industrial sector.
Reason: Government control often leads to inefficiencies and hinders competition.
Question : Assertion: Prior to 1991, many large-scale industries in India have a greater control over Indian markets due to a lack of foreign competition.
Reason: The policymakers of India adopted granting licenses for expansion.
Question : Assertion: Entrepreneurship development leads to increased competition and market efficiency.
Reason: New businesses entering the market create choices for consumers and encourage existing firms to improve.
Option 1: Both assertion and reason are true, and the reason correctly explains the assertion.
Option 2: Both assertion and reason are true, but the reason does not correctly explain the assertion.
Regular exam updates, QnA, Predictors, College Applications & E-books now on your Mobile