Asked by marta kebede on Apr 24, 2024
Verified
Which statement is true?
A) All monopolies are large firms.
B) The monopolist produces a product similar to its competitors.
C) There is no such thing as a natural monopoly.
D) There are no close substitutes for a monopolist's product.
Natural Monopoly
A market situation where a single firm can supply a product or service at a lower cost than any potential competitor, often due to economies of scale.
Substitutes
Alternative goods or services that can satisfy the same needs as another, often leading to a choice between the two based on price, convenience, or preference.
- Distinguish between monopolies and perfectly competitive firms based on revenue, cost structures, and output decisions.
Verified Answer
CC
Carolyn CantuMay 02, 2024
Final Answer :
D
Explanation :
A defining characteristic of a monopoly is that it has no close substitutes for its product. Choice A is false because monopolies can be small or large firms. Choice B is false because a monopolist does not have any close competitors. Choice C is debated among economists, but there are some industries where it is more efficient for there to be only one producer, such as natural gas or water utilities.
Learning Objectives
- Distinguish between monopolies and perfectly competitive firms based on revenue, cost structures, and output decisions.