Home › mcqs › Class 12 economics non competitive markets

Non-competitive Markets (12 Economics)

Practise chapter-wise MCQs for Class 12 Economics — Non-competitive Markets. Every question comes with the correct answer and an explanation.

✓ 100% Free ✓ No Login Needed ✓ NCERT / CBSE Aligned ✓ Download as PDF

TL;DR: Practise chapter-wise MCQs for Class 12 Economics — Non-competitive Markets. Every question comes with the correct answer and an explanation.

Written & reviewed by the Syllab.in Academic Team (CBSE/NCERT subject experts) · Updated Aug 8, 2026

🤖 Stuck on any question? Ask Syllab's free AI Tutor for a step-by-step explanation — instant, unlimited, no login.

Practise chapter-wise MCQs for Class 12 Economics — Non-competitive Markets. Every question comes with the correct answer and an explanation.

Non-competitive Markets MCQs with Answers & Explanations

Q1. In an oligopoly, the firms are typically:

  1. Engaged in a price war indefinitely
  2. Price takers
  3. Price setters
  4. Interdependent in their decisions ✓ (correct)

Explanation: In an oligopoly, the actions of one firm significantly affect the other firms, leading to interdependence in their pricing, output, and advertising strategies.

Q2. When a monopolist faces a downward-sloping demand curve, its marginal revenue (MR) is:

  1. Less than the price ✓ (correct)
  2. Greater than the price
  3. Equal to the price
  4. Zero at all output levels

Explanation: To sell an additional unit, a monopolist must lower the price not only for that unit but also for all previous units sold. Thus, the marginal revenue is less than the price.

Q3. Price discrimination is most likely to occur in which type of market?

  1. Monopolistic Competition
  2. Monopoly ✓ (correct)
  3. Oligopoly
  4. Perfect Competition

Explanation: A monopolist, having sole control over supply, can charge different prices to different consumers for the same good or service, a practice known as price discrimination.

Q4. What is a common outcome of 'excess capacity' in monopolistic competition?

  1. Firms experience significant economies of scale.
  2. Firms produce at the minimum point of their average total cost curve.
  3. Firms produce less than the output that minimizes average total cost. ✓ (correct)
  4. Market efficiency is maximized.

Explanation: In monopolistic competition, firms typically operate with excess capacity, meaning they produce at an output level below that which minimizes average total cost, due to product differentiation and downward-sloping demand.

Q5. A characteristic feature of monopolistic competition is:

  1. Significant economies of scale
  2. Homogeneous products
  3. Collusion among firms
  4. Product differentiation ✓ (correct)

Explanation: Monopolistic competition involves many firms selling differentiated products, which allows them to have some degree of control over their prices.

Q6. Which condition indicates that a monopolist is maximizing its profits?

  1. Marginal Revenue = Marginal Cost (MR=MC) ✓ (correct)
  2. Marginal Revenue = Price (MR=P)
  3. Total Revenue = Total Cost (TR=TC)
  4. Price = Marginal Cost (P=MC)

Explanation: Profit maximization for any firm, including a monopolist, occurs at the output level where marginal revenue equals marginal cost (MR=MC).

Q7. Which of the following is a barrier to entry in a monopoly market?

  1. High consumer demand
  2. Government patents and licenses ✓ (correct)
  3. Low production costs
  4. Easy access to raw materials

Explanation: Government-granted patents, licenses, or exclusive rights create significant barriers to entry, preventing other firms from entering the market and thus maintaining a monopoly.

Q8. Which of the following best describes a monopoly market structure?

  1. A large number of buyers and sellers, with identical products.
  2. Many sellers offering differentiated products.
  3. A single seller selling a unique product with no close substitutes. ✓ (correct)
  4. A few dominant sellers who are interdependent in their pricing and output decisions.

Explanation: A monopoly is characterized by a single seller in the market offering a product with no close substitutes, giving the seller significant market power.

Q9. The Kinked Demand Curve model is often associated with:

  1. Perfect Competition
  2. Monopoly
  3. Monopolistic Competition
  4. Oligopoly ✓ (correct)

Explanation: The Kinked Demand Curve model attempts to explain price rigidity in oligopolistic markets, where firms are hesitant to change prices due to the fear of reactions from competitors.

Q10. In an oligopoly, a cartel is a group of firms that:

  1. Collude to set prices and output ✓ (correct)
  2. Independently decide their production levels
  3. Are price takers in the market
  4. Compete vigorously on price

Explanation: A cartel is an agreement among firms in an oligopoly to act like a single monopolist by coordinating their pricing and output decisions to maximize joint profits.

More 12 Economics MCQs

  • Introduction to Microeconomics
  • Theory of Consumer Behaviour
  • Production and Costs
  • The Theory of the Firm under Perfect Competition
  • Market Equilibrium
  • Introduction to Macroeconomics

🤖 Stuck on any of these? Ask Syllab's free AI Tutor to explain step by step →

Explore:

  • Syllabus
  • Practice
  • Mock Tests
  • NCERT Solutions
  • Coding
  • GK Quiz
  • Career Predictor
  • AI Tutor
  • Live Quiz
  • Doubt Solver
  • Microlearning
  • Free Alternatives
  • Kids Zone
  • Study Room
  • Calculators
  • Worksheets

Syllab.in — Free learning for Indian students, Class 1–12