Match List I with List II

List I		List II
A.	Perfect competition	I.	Many real or perceived differences in products
B.	Monopoly	II.	Little or no difference in products
C.	Monopolistic competition	III.	Identical products
D.	Oligopoly	IV.	Product without close substitutes

Choose the correct answer from the options given below:

The correct answer is ​A ‐ III, B ‐ IV, C ‐ I, D ‐ II

Key Points The correct match is given below:

Important Points

Perfect competition: 

Following are the characteristics of perfect competition:

• Large number of buyers and sellers
• Homogenous product is produced by every firm
• Free entry and exit of firms
• Zero advertising cost
•  Consumers have perfect knowledge about the market
• All the factors of production, viz. labour, capital, etc, have perfect mobility in the market
• No government intervention
• No transportation costs
•  Each firm earns normal profits and no firms can earn super-normal profits.
• Every firm is a price taker.

Monopoly:

Following are the characteristics of Monopoly:

• Single seller
• No close substitutes
• Barriers to entry
• Price maker

Monopolistic competition:

Following are the characteristics of Monopolistic competition:

• There are many firms.
• Freedom of entry and exit.
• Firms produce differentiated products. Real or perceived differences in products exist.
• Firms have price inelastic demand; they are price makers because the good is highly differentiated
• Firms make normal profits in the long run but could make supernormal profits in the short term
• Firms are allocative and productively inefficient.

Oligopoly:

Following are the characteristics of Oligopoly:

• Interdependence of firms on each other
• Advertising is a powerful instrument in the hands of an oligopolist.
• Cut-throat competition among the firms
• Barriers to Entry of Firms prevail
• Large companies produce goods with little or no difference.