Which of the following statement is incorrect?

Question

Accepted Answer

Option 4 is the correct answer because it states that commodities offered for sale under perfect competition will be heterogeneous, which is incorrect. In a perfect competition market structure, the products offered by different firms are homogeneous, meaning they are identical or very similar in nature. This homogeneity is a key characteristic of perfect competition, as it ensures that no single firm can influence the market price, and consumers perceive no difference between the products offered by different firms.

Now, let's explain why each of the other options is incorrect:

1. **Option 1: A monopolist may restrict the output and raise the price.**
   - This statement is correct. In a monopoly, the monopolist is the sole producer of a product or service and has significant control over the market. The monopolist can restrict output to create scarcity, which allows them to raise prices and maximize profits. This behavior is a fundamental characteristic of monopoly power.

2. **Option 2: Under monopoly there is no difference between a firm and an industry.**
   - This statement is correct. In a monopoly, a single firm constitutes the entire industry because it is the only provider of a particular product or service. Therefore, there is no distinction between the firm and the industry, as the firm is the sole entity operating in that market.

3. **Option 3: Product differentiation is peculiar to monopolistic competition.**
   - This statement is correct. Monopolistic competition is characterized by many firms offering products that are similar but not identical, leading to product differentiation. Each firm tries to differentiate its product from others through branding, quality, features, or other attributes, which is a defining feature of monopolistic competition.

In summary, Option 4 is the correct answer because it inaccurately describes a characteristic of perfect competition, where products are homogeneous, not heterogeneous. The other options correctly describe features of monopoly and monopolistic competition.