Question

Joe Santos owns the only pizza parlor in a small town that is also home to a McDonald's, a Taco Bell, and a Kentucky Fried Chicken. Using a broad definition of a monopoly, Joe has a monopoly if the menu items sold at the other restaurants are not considered close substitutes for the food sold at the pizza parlor.
1) True
2) False

Answer 1

Answer:

True

Explanation:

A more precise way to describe the situation is that Joe's pizza parlor is a monopolistic competition. But that definition considers that all 'food' items have some degree of close substitute relation.

But yes, if you consider this two conditions:

1. a broad definition of monopoly
2. other restaurants are not considered close substitutes for the food sold at the pizza parlor

Then yes, Joe has monopoly