Question : Match the characteristics with their market structure:
(a) Marginal Cost (MC) = Market Price(MR)
(b) The firm will tend to set output to earn maximum profit.
Option 1: (a) Pure competition, and (b) Pure monopoly
Option 2: (a) Pure monopoly, and (b) Monopolistic competition
Option 3: (a) Oligopoly, and (b) Monopolistic competition
Option 4: (a) Pure competition, and (b) Oligopoly
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Correct Answer: (a) Pure competition, and (b) Pure monopoly
Solution : The correct options are (a) Pure competition and (b) Pure monopoly .
In Pure competition, firms are price takers, meaning they have no control over the market price. Their Marginal Cost (MC) equals the Market Price(MP) because they produce at the point where MC equals price to maximise profit. Monopolistic competition normally does not have MC = MP. Pure competition does not entail strategic considerations among companies the way oligopoly does.
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