Suppose that a firm in a competitive market succeeds in producing a superior product and selling it at a price that generates a large demand.As a result,the firm's market share is almost 100 percent.Meanwhile,other firms are trying to regain their market shares through research and development.Is this firm a monopolist?
A) Yes, because it has a power to dictate the price consumers must pay.
B) Yes, because it is virtually the only firm in the market.
C) No, because it does not have a power to dictate the price consumers must pay.
D) No, because it faces potential competition from other companies.

Question

Quizplus · Accepted Answer

The fact that other firms are investing in research and development to regain their market shares indicates that there is potential competition in the market, which means the firm is not a monopolist. The ability to generate a large demand and achieve a market share close to 100% does not necessarily make a firm a monopolist. Moreover, the statement doesn't provide information on whether the firm has the power to dictate the price consumers must pay.

Suppose That a Firm in a Competitive Market Succeeds in Producing