Multiple Choice
If producing is preferable to shutting down, how much output will a profit-seeking monopolist choose to produce?
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12. Monopoly
Characteristics of Monopoly
Multiple Choice
Which of the following statements is true of a monopoly?
A
A monopoly is the sole seller of a product with no close substitutes.
B
In a monopoly, there are many firms competing in the market.
C
A monopoly cannot influence the market price of its product.
D
A monopoly faces a perfectly elastic demand curve.
Verified step by step guidance1
Understand the definition of a monopoly: A monopoly is a market structure where there is only one seller of a product or service, and there are no close substitutes available to consumers.
Analyze the statement 'A monopoly is the sole seller of a product with no close substitutes.' This aligns with the definition of a monopoly, making it a true statement.
Consider the statement 'In a monopoly, there are many firms competing in the market.' This contradicts the definition because a monopoly has only one firm, so this statement is false.
Evaluate the statement 'A monopoly cannot influence the market price of its product.' Since a monopoly is the sole seller, it has significant control over the price, so this statement is false.
Review the statement 'A monopoly faces a perfectly elastic demand curve.' A monopoly faces a downward-sloping demand curve because it is the only seller, so this statement is false.
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