Distinguish between collusive and non-collusive oligopoly. Explain how the oligopoly firms are interdependent in taking price and output decisions.
Oligopoly in a commodity market occurs when there are a small number of firms producing a homogenous commodity. There are two types of oligopoly, collusive and non-collusive.
In a collusive oligopoly, the firms may collude together and decide not to compete with each other and maximise total profits of the two firms together. In such a case the two firms would behave like a single monopoly firm that has two different factories producing the commodity. The firms cooperate with each other in deciding price and output.
In a Non-Collusive Oligopoly, firms compete with each other. Non-Collusive Oligopoly exists when the firms in an oligopoly do not collude and so have to be very aware of the reactions of other firms when making price decisions.
In an oligopoly, firms are interdependent because each firm takes into consideration the likely reactions of its rival firms when deciding its output and price policy. It makes a firm dependent on other firms. The firm may have to reconsider the change in the light of the likely reactions.
Explain the process of money creation by the commercial banks with the help of a numerical example.
From the following data about a Government budget, find out (a) Revenue deficit, (b) Fiscal deficit and (c) Primary deficit:
(Rs. Arab)
(i) Capital receipts net of borrowings 95
(ii) Revenue expenditure 100
(iii) Interest payments 10
(iv) Revenue receipts 80
(v) Capital expenditure 110
Giving reasons classify the following into intermediate products and final products:
Furniture purchased by a school.
Explain the role of the following in correcting 'excess demand' in an economy:
Open market operations
Explain the role of the following in correcting 'deficient demand' in an economy:
Open market operations.
Explain the role of the following in correcting 'deficient demand' in an economy:
Bank rate
Giving reasons classify the following into intermediate products and final products:
Chalks, dusters, etc. purchased by a school.
