Question

Monopoly producers are faced with A. only a few competitors producing the same product. B. no competitive producers of the same product. C. many competitors producing the same product. D. at least one competitive producer of the same product.

Answer 1

Answer:

The correct answer is letter "B": no competitive producers of the same product.

Explanation:

Monolopies are markets where one company has almost or complete control over a certain product. That corporation acts as the only provider for a good becoming its price maker. This situation arises when firms possess certain technology and its exclusive patents that make the introduction of competitors of the same product difficult or non-existent.

In some other cases, governments license monopolies when a company is to provide an essential service important for society such us power service or water.

Answer 2

Answer:

B) no competitive producer of the same product

Explanation:

Monopoly refers to a single seller selling a unique product to a large number of buyers. A monopoly dominate the industry has total control of the market.

Characteristics of a Monopoly

1) High barrier to entry: This implies that competitors are restricted. New sellers are not allowed entry.

2) Single seller and large buyers: There is a single seller selling to a large number of consumers in the market.

3) Unique product: The product sold in a monopoly are unique have little or no close substitute.

4) Price Maker: A monopoly decides on the price he wants to sell his product. He can increase the price at will.

5) Economies of scale: A monopoly enjoys economies of scale because he can buy raw materials in large quantity at a reduced price, thereby reducing the cost of production and increasing Profits.

6) No competitor: Since the market is characterised by a single seller, high barrier to entry, then, competitor does not exist in a monopoly market.