A monopoly: A) always makes a profit. B) is characterized by a single seller who produces a well-defined product for which there are no good substitutes. C) always has naturally created barriers. D) can force consumers to purchase what it is selling. OA) always makes a profit. B) is characterized by a single seller who produces a well-defined product for which there are no good substitutes. C) always has naturally created barriers. D) can force consumers to purchase what it is selling. SOLUTION.PDF Good News! We have found the answer to this question! A
The Correct Answer and Explanation is :
The correct answer is: B) A monopoly is characterized by a single seller who produces a well-defined product for which there are no good substitutes.
Explanation:
A monopoly is a market structure where a single firm dominates the entire market for a particular product or service. The defining characteristics of a monopoly include:
- Single Seller: There is only one producer or provider of a good or service. This single seller controls the supply and price of the product in the market.
- Unique Product: The product offered by a monopoly has no close substitutes. This uniqueness gives the firm significant market power because consumers cannot easily switch to alternative products.
- Barriers to Entry: Monopolies exist due to high barriers to entry, which prevent other firms from entering the market. These barriers can be natural (e.g., economies of scale) or artificial (e.g., patents, government regulation).
Why Other Options Are Incorrect:
- A) Always makes a profit: Monopolies may not always make a profit. If demand for their product is too low or production costs are too high, they can incur losses.
- C) Always has naturally created barriers: While some monopolies are natural (e.g., utilities due to economies of scale), others are created by artificial means, such as patents or government regulations.
- D) Can force consumers to purchase what it is selling: A monopoly cannot force consumers to buy its product. Consumers retain the choice not to purchase if they don’t value the product or if it is too expensive.
In conclusion, B correctly defines the core characteristics of a monopoly: a single seller and no good substitutes for its product. Monopolies often lead to reduced competition, higher prices, and lower consumer surplus compared to competitive markets.