Which of the following are necessary characteristics of a monopoly? i) The firm is the sole seller of its product.
Ii) The firm's product does not have close substitutes.
Iii) The firm generates a large economic profit.
Iv) The firm is located in a small geographic market.
A) i) and ii) only
B) i) and iii) only
C) i), ii), and iii) only
D) i), ii), iii), and iv)

Question

Quizplus · Accepted Answer

In order for a firm to be considered a monopoly, it must be the sole seller of its product (i) and its product must not have close substitutes (ii). While generating a large economic profit (iii) may be a characteristic of a monopoly, it is not a necessary one. Similarly, the geographic location of the firm (iv) is not a necessary characteristic for it to be considered a monopoly.

Which of the Following Are Necessary Characteristics of a Monopoly