Question

Why is there no competition in a monopoly?
a) there are no close substitutes
b) there are too many substitutes
c) prices are set by the government
d) the government forbids competition

Answer 1

a) there are no close substitutes

Explanation:

A monopoly results when there is a single provider of a particular good or service. Since they’re the only company providing that good or service, the consumer must conduct their business with that specific provider. For example, imagine that Walmart is the only store you can buy food from. Walmart would dominate the entire supply market as it would be the only store from which you can buy your food.

Answer 2

a) there are no close sub