Multiple Choice
If a monopolist increases the output of its product each week, which of the following is most likely to occur?
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12. Monopoly
Characteristics of Monopoly
Multiple Choice
Which of the following is not a characteristic of a monopoly?
A
The product offered has no close substitutes.
B
The firm is a price maker.
C
There are many sellers in the market.
D
There are significant barriers to entry.
Verified step by step guidance1
Step 1: Understand the definition of a monopoly. A monopoly is a market structure where a single firm is the sole seller of a product with no close substitutes.
Step 2: Identify key characteristics of a monopoly: (a) The firm is a price maker, meaning it can influence the market price; (b) There are significant barriers to entry preventing other firms from entering the market; (c) The product offered has no close substitutes.
Step 3: Analyze the option 'There are many sellers in the market.' In a monopoly, there is only one seller, so this characteristic does not apply.
Step 4: Compare each option against the monopoly characteristics to determine which one is not true for a monopoly.
Step 5: Conclude that the statement 'There are many sellers in the market' is not a characteristic of a monopoly because monopolies have a single seller.
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