NTA-NET (Based on NTA-UGC) Economics (Paper-II): Questions 1 of 850

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» Micro-Economic Analysis » Theory of Pricing » Monopoly, Monopolistic Competition, Duopoly and Oligopoly

Appeared in Year: 2014

Assertion-Reason▾

Question

Assertion (Ꭺ)

The concept of supply curve is meaningless for the monopolist. (June)

Reason (Ꭱ)

Monopolists are price setters; it does not make any use to ask what output they would produce at various prices.

Choices

Choice (4) Response

a.

Both Ꭺ and Ꭱ are true but Ꭱ is NOT the correct explanation of Ꭺ

b.

Both Ꭺ and Ꭱ are false

c.

Both Ꭺ and Ꭱ are true and Ꭱ is the correct explanation of Ꭺ

d.

Ꭺ is true but Ꭱ is false

Answer

c.

Explanation

  • The concept of supply curve is relevant only when the firm exercises no control over the price of the product and therefore takes it as given. An important feature of the monopoly is that, unlike a competitive firm, the monopolist does not have the supply curve this is because a monopolist does not take the price as given and exercises control over the price of the product, as he is the sole producer of the product.

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