CAPF AC 2020 Q63: Indian Economy – Microeconomics & Market Concepts
Mobile phone operators market in India is an example of
- (a) Monopoly
- (b) Monopolistic Competition
- (c) Oligopoly
- (d) Perfect Competition
Answer: (c) Oligopoly
Explanation
Market structures
How to think: count the sellers.
India has only a few big mobile operators.
A market with a few large sellers is an oligopoly.
| Market | Number of sellers | Product | Example |
|---|---|---|---|
| Monopoly | One | No close substitute | Indian Railways |
| Oligopoly | A few large | Same or slightly different | Mobile operators, airlines, cement |
| Monopolistic competition | Many | Differentiated by brand | Soap, toothpaste, restaurants |
| Perfect competition | Very many | Identical | Close to it: farm produce in a mandi |
Marks of an oligopoly:
| Feature | Detail |
|---|---|
| Interdependence | Each firm watches the rivals' prices |
| Entry | Hard; huge cost of spectrum and towers |
| Risk | Firms may form a cartel |
Answer: (c) Oligopoly.
Why each option is right or wrong
- (a) Incorrect. A monopoly has a single seller; mobile services have several.
- (b) Incorrect. Monopolistic competition needs many sellers, not a handful.
- (c) CORRECT. A few large firms control the mobile market: an oligopoly.
- (d) Incorrect. Perfect competition needs very many small sellers and free entry.
Key point
Monopoly: one seller. Oligopoly: a few big sellers (telecom, airlines, cement). Monopolistic competition: many sellers, branded products. Perfect competition: very many sellers, identical product.
Remember
Few big sellers = oligopoly (telecom).
Common mistakes
- Mixing up monopolistic competition with oligopoly because both involve brands.
- Calling the market a monopoly because one firm is the largest.
- Forgetting that a market with just two sellers is a duopoly, a kind of oligopoly.
Exam tip
Count the players: one is monopoly, a few is oligopoly, many is competition.
Sources
- NCERT Class XII Economics — Introductory Microeconomics (Non-competitive Markets)
- N. Gregory Mankiw — Principles of Economics (Oligopoly)