Hint

  \(Quantity\quad Demanded=Demand\quad Function\times Number\quad of\quad Consumers\\ \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad =[10-2\times 2]\times 4000=24000\quad units\\ Quantity\quad supplied=Supply\quad Function\times Number\quad of\quad Firms\\ \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad =[20+2\times 2]\times 2\times 1000=24000\quad units\\ \)

oligopoly

Marginal Revenue

(i) MR curve will also be a straight line parallel to the OX axis, as the AR curve.
(ii) MR is zero, when TR is a horizontal line. Horizontal TR implies that quantity may increase of decrease despite of no change in price (which is constant).

When demand of commodity increases and supply decreases (i.e., when demand curve shifts to the right and supply curve shifts to the left), the equilibrium price will always increase but the equilibrium quantity may or may not be affected. There may be three situations:
(i) When increase in demand is more than the decrease in supply, both equilibrium price and equilibrium quantity will rise. See Fig. (a).
(ii) When increase in demand is equal to decrease in supply, then the equilibrium price will rise but the equilibrium quantity remains the same. See Fig. (b).
(iii) When increase in demand is less. than the decrease in supply, then the equilibrium price will rise but equilibrium quantity will fall. See Fig.(c).

Perfectly elastic supply implies a situation of infinite supply corresponding to a given price.In such a situation, if demand curve shifts to the right, implying increase in demand, there does not arise a situation of excess demand because even at the existing price, supply is infinite. Hence, price remains constant.

If there is decrease in demand when demand curve shifts to the left, there is no possibility of fall in price.Because even the slightest fall in price would mean zero supply in a situation of perfectly elastic supply curve.

The demand curve facing a monopolistically competitive firm is likely to be very elastic because the products produced by the monopolistically competitive firms are close substitutes to each other.
Consequently, Elasticity of Demand is high, i.e. presence of closely substitutable goods makes the firm's demand curve very elastic under monoplistic competition.

Demand curve under monopolistic competition is similar to monopoly.But the main difference between monopoly and monopolistic competition is that under monopolistic competition,  demand curve is more elastic.It means that in response to a change in price, change in demand is higher.It is because, in a monopolistic competitive market, goods have close substitutes and in monopoly market goods do not have close substitutes.

In a perfectly competitive market) at any price lower than the equilibrium price the quantity demanded of a commodity exceeds quantity supplied. It is called a situation of 'excess demand'.
When there is excess demand, the equilibrium price will be higher than the price at which there is excess demand. Whenever there is excess demand, the following changes take place:
(i) As demand exceeds supply, all buyers will not be able to buy the total quantity they want to buy. So there will be competition among buyers. This will raise the price.
(ii) As the price starts rising, quantity supplied starts rising as the sellers sell more when price rises (Expansion of Supply).
(iii) The rise in the price of the commodity causes contraction of demand and contraction of demand will continue till the price reaches the level at which D = S.
(iv) Thus, the excess demand will be wiped out and equilibrium price and equilibrium quantity are established.
In the given diagram, at the given price OP₀ , the quantity demanded isOQ ₁ while the quantity supplied is OQ. So there is excess demand to the tune of 'BC' or Q ₀. So there is excess demand to the tune of 'BC' or Q₀Q1· As a result, buyers compete to buy what they want. So, this will raise the price which will lead to contraction of demand and expansion of supply as shown by the arrows in the diagram and these movements will continue till equilibrium is reached at point X and equilibrium price is OP and equilibrium quantity is OQ.

(i) Product differentiation It is a distinct feature of monopolistic competition.A product is often differentiated by way of trademarks and brand names.The differentiated products are close substitutes of each other like colgate and closeup toothpaste.

Because of product differentiation, each firm can influence its price.So that, each firm has a partial control over price of its product.

(ii) Free entry or exit of firms Firms are free to enter the industry or leave it.However, new firms have no absolute freedom of entry into industry.Products of some firms may be legally patented.New firms cannot produce those products, e.g. no rival firm can produce or sell a patented item like woodland shoes.

Elasticity of Demand measures the degree of responsiveness in quantity demanded due to change in own price of the product(price elasticity) or change in the income of the consumer(income elasticity)or change in the price of related goods(cross elasticity).There are many factors that affect Elasticity of Demand and market form is definitely an important factor affecting Elasticity of Demand.

Elasticity of Demand in different market forms is given below:

(a)   Quantity demanded = 160 - 2p

Quantity supplied = -40 + 2p

Equlibrium is attained at a point where market demand is equal to market supply, i.e.

Quantity demanded = Quantity supplied

Hence,            \(160-2p=-4p+2p\\ 160+40=2p+2p\\ 200=4p,\quad p=\frac { 200 }{ 4 } =50\)

Hence, equilibrium price = Rs.50

Equilibrium quantity will be,

Quantity demanded = Quantity supplied

\(=160-20=160-2\times 50\\ =160-100=Rs.60\)

(b)  At any price below the equilibrium price, there will be excess demand.

Let us take at price Rs.20

At p = Rs.20

    \(Quantity\quad demanded\quad =160=-2p\\ \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad =160-2\times 20=160-40\\ \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad =Rs.120\\ Quantity\quad supplied\quad =\quad -40\quad +\quad 2p\\ \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad =\quad -40\quad +\quad 2\times 20\quad =\quad -40\quad +40\\ \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad =0\)

Quantity demanded

> Quantity supplied [ excess demand]

Also, it can be concluded that at Rs.20 there will be no supply of the commodity, hence between 20 < p < 50, there will be excess demand.

(c)  At any price above equilibrium, there will be excess supply.

Let us take at price Rs.80

\(Quantity\quad demanded\quad =160-2p\\ \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad =160-2\times 80=160-60\\ \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad =0\\ Quantity\quad supplied\quad =-40+2p\\ \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad =-40+2\times 80=-40+160\\ \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad =120\)

Quantity demanded

<Quantity supplied [excess supply]

Also, it can be concluded that at p=Rs.80 demand will be zero, hence there will be excess supply between 50 < p < 80.