ECONOMICS
COMPETITION AND MARKET STRUCTURES
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Is a monopoly.
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Faces perfectly inelastic demand.
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Can charge any price it wants and not lose customers.
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Is producing a new product.
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Detailed explanation-1: -What is Monopoly. Definition: A market structure characterized by a single seller, selling a unique product in the market. In a monopoly market, the seller faces no competition, as he is the sole seller of goods with no close substitute.
Detailed explanation-2: -Single seller: In a monopoly, there is one seller of the good, who produces all the output. Therefore, the whole market is being served by a single company, and for practical purposes, the company is the same as the industry. Price discrimination: A monopolist can change the price or quantity of the product.
Detailed explanation-3: -Monopoly is a firm where there is only a single seller who sells unique product, which has no close substitute, and has a full control over the firm. Hence, a market structure in which there is a single seller is called monopoly.
Detailed explanation-4: -A single-price monopoly is a firm that must sell each unit of its output for the same price to all its customers. DeBeers sell diamonds (quality given) at a single price. A price-discriminating monopoly is a firm that is able to sell different units of a good or service for different prices.
Detailed explanation-5: -If the entire output of a market is produced by a single seller, the firm: Is a monopoly.