Asked by Viraj Mistry on May 16, 2024
Verified
Which of the following is a characteristic of pure monopoly?
A) Close substitute products.
B) Barriers to entry.
C) The absence of market power.
D) "Price taking."
Pure Monopoly
A market structure where a single company is the sole producer for a particular good or service, facing no competition.
Barriers to Entry
Factors that make it difficult for new firms to enter a market, such as high startup costs, regulatory requirements, and established competitors.
Market Power
The ability of a firm to influence or control the price and quantity of goods or services in a market.
- Understand the characteristics and consequences of pure monopoly in economic systems.
- Pinpoint and clarify the role of entry impediments in markets with monopolistic characteristics.
Verified Answer
RD
Ruhama DestaMay 17, 2024
Final Answer :
B
Explanation :
Barriers to entry are a characteristic of pure monopoly, as there are no close substitutes and only one firm controls the market. This allows the firm to maintain market power and control prices. Close substitute products are a characteristic of monopolistic competition. "Price taking" is a characteristic of perfect competition where firms have no ability to control prices.
Learning Objectives
- Understand the characteristics and consequences of pure monopoly in economic systems.
- Pinpoint and clarify the role of entry impediments in markets with monopolistic characteristics.