[amp_mcq option1=”Big size” option2=”Identical product” option3=”Absence of government taxes” option4=”No close substitute” correct=”option4″]<\/p>\n
The correct answer is D. No close substitute.<\/p>\n
A monopoly is a market structure in which there is only one seller of a good or service. This means that the monopolist has a great deal of market power and can charge a high price for its product.<\/p>\n
There are several conditions that must be met for a monopoly to exist. One condition is that there must be no close substitutes for the monopolist’s product. This means that there are no other products that consumers can buy that are similar to the monopolist’s product. If there were close substitutes, then consumers would have more choices and the monopolist would not be able to charge as high of a price.<\/p>\n
Another condition for a monopoly to exist is that there must be barriers to entry into the market. This means that it must be difficult for new firms to enter the market and compete with the monopolist. Barriers to entry can be natural, such as economies of scale, or they can be artificial, such as government regulation.<\/p>\n
If there are no close substitutes for a product and there are barriers to entry into the market, then a monopoly can exist. The monopolist will be able to charge a high price for its product and earn a high profit.<\/p>\n
Option A is incorrect because a monopoly does not necessarily have to be big. A small firm can still have a monopoly if there are no close substitutes for its product and there are barriers to entry into the market.<\/p>\n
Option B is incorrect because a monopoly does not necessarily have to sell an identical product. A monopoly can sell a differentiated product, as long as there are no close substitutes for its product.<\/p>\n
Option C is incorrect because the absence of government taxes does not affect whether or not a monopoly can exist. A monopoly can exist with or without government taxes.<\/p>\n
I hope this explanation is helpful. Please let me know if you have any other questions.<\/p>\n","protected":false},"excerpt":{"rendered":"
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