Using a broad definition, a firm would have a monopoly if
A)it produced a product that has substitutes.
B)it does not have to collude with any other producer to earn an economic profit.
C)there is no other firm selling a substitute for its product close enough that its economic profits are competed away in the long run.
D)it can make decisions regarding price and output without violating antitrust laws.

Question

Quizplus · Accepted Answer

A firm would have a monopoly if it is the only seller of a good or service in the market without any close substitutes. Therefore, option C is the correct choice. Option A is incorrect as the presence of substitutes suggests that the firm is not the only supplier and is subject to competition. Option B may suggest a high market share, but it does not necessarily indicate a monopoly. Option D is incorrect as a firm can violate antitrust laws while still having a monopoly.

Using a Broad Definition, a Firm Would Have a Monopoly