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Firm X Is a Single Seller of Good X

Question 2

Multiple Choice

Firm X is a single seller of good X.There are,however,two substitutes for good X.Given this,


A) Firm X cannot be a monopolist because the theory of monopoly assumes there are no close substitutes for the good the single seller sells.
B) Firm X can be a monopolist because we do not know if the two substitutes are close substitutes; additionally, it may be that Firm X acts as if the assumption of no close substitutes holds.
C) Firm X cannot be a monopolist because if substitutes exist for the good it produces, its demand curve is horizontal and monopolists face downward-sloping demand curves.
D) none of the above

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