Question

diamonds are unique as a gemstone and have no substitutes. which of the following characteristics of a monopoly is being exhibited with the above statement? a.) a monopoly has control over an essential resource as a barrier to entry. b.) a monopoly is a price maker. c.) a monopoly can maintain imperfect information in the market. d.) a monopoly has a differentiated product.

Answer 1

A diamond as a jewel is unique and irreplaceable. so, b.) A monopoly is a price maker, having the properties of a monopoly.

In a monopoly market, a monopoly or controlling firm has complete control of the market and thus sets the price and supply of goods or services. Monopolies as well as oligopolies are such examples for high barriers in order to enter. A monopoly is a single company that produces goods or services with no substitutes. A cable company that is the city's sole service provider.

A monopoly is considered a price maker and can set the price of the products it sells. However, monopolists are constrained by consumers' willingness and ability to buy, also called demand. A monopoly is a kind of imperfect market that has no competitors and no close substitutes for the product. Therefore, a company offering a product can charge any price without considering its customers or competitors. Such a monopoly is therefore a price maker.

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