Class 10 Market Mock Test (ICSE)

Topics in Market

• Meaning and types of market
• Perfect competition
• Monopoly
• Monopolistic competition
• Market equilibrium

Market practice questions with answers

1. Q1Multiple choice·1 mark
   In economics, the term 'market' refers to:

   1. (a)A specific physical geographical location where trading occurs
   2. (b)A government-regulated institution for wholesale trading exclusively
   3. (c)An arrangement where buyers and sellers come in contact with each other to buy and sell goods and services
   4. (d)A weekly village marketplace for agricultural commodities
   Show answer and step marks

   1. Correct option: (c) An arrangement where buyers and sellers come in contact with each other to buy and sell goods and services+1

   Answer: (c)
2. Q2Multiple choice·1 mark
   Under perfect competition, an individual firm is a:

   1. (a)Price-discriminator
   2. (b)Price-taker
   3. (c)Price-maker
   4. (d)Price-controller
   Show answer and step marks

   1. Correct option: (b) Price-taker+1

   Answer: (b)
3. Q3Multiple choice·1 mark
   Which of the following best describes the demand curve faced by an individual firm under monopolistic competition?

   1. (a)Perfectly elastic, parallel to the X-axis
   2. (b)Downward sloping and relatively inelastic
   3. (c)Downward sloping and relatively elastic
   4. (d)Perfectly inelastic, parallel to the Y-axis
   Show answer and step marks

   1. Correct option: (c) Downward sloping and relatively elastic+1

   Answer: (c)
4. Q4Multiple choice·1 mark
   Market equilibrium is attained at the price where:

   1. (a)Market demand equals market supply
   2. (b)Total cost equals total revenue
   3. (c)Market demand is greater than market supply
   4. (d)Market supply is greater than market demand
   Show answer and step marks

   1. Correct option: (a) Market demand equals market supply+1

   Answer: (a)
5. Q5Long answer·4 marks
   (a) Explain the term 'product differentiation' with reference to monopolistic competition. [2] (b) Why do firms under monopolistic competition incur heavy selling costs? Give two reasons. [2]
   Show answer and step marks

   1. (a) Product differentiation means that the products of different firms are close substitutes but are made different from one another in brand name, design, packaging, quality, colour or after-sales service.+1
   2. (a) Because buyers come to prefer a particular brand, each firm gets some control over the price of its own product (a degree of monopoly power).+1
   3. (b) First reason, any one of: to inform buyers about the product and its special features among many close substitutes; to differentiate the product and build a brand image and brand loyalty; to persuade buyers to switch from rival brands; to increase or maintain sales and market share in the face of competition from many sellers; to create demand for a new product; or any other valid reason.+1
   4. (b) Second reason, a different one from the same list.+1

   Answer: (a) Products of different firms are close substitutes but differ in brand, design, packaging or quality, giving each firm some control over its price. (b) Any two of: to inform buyers among many close substitutes; to build brand image and loyalty; to attract buyers from rival brands; to raise or keep sales against many competitors; to create demand for new products.
6. Q6Long answer·4 marks
   Explain the following features of monopolistic competition: (a) Product differentiation (b) Selling costs
   Show answer and step marks

   1. (a) Product differentiation: Products produced by different competing firms are close substitutes for one another, yet they are distinguished by brand name, design, quality, or packaging, which gives each firm some degree of control over its price.+2
   2. (b) Selling costs: These are expenses incurred on advertising, publicity, and sales promotion to create brand awareness and persuade buyers to purchase a specific firm's product over its substitutes.+2

   Answer: (a) Product differentiation: the products of competing firms are close but not perfect substitutes, distinguished by brand name, design, quality or packaging, which gives each firm some control over its price. (b) Selling costs: expenses on advertising, publicity and sales promotion incurred to persuade buyers to prefer a firm's product over its substitutes.

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