Question

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.

Answer 1

1 and 11

Step-by-step explanation:

A monopoly is a market structure with only one seller supplying a unique product to a large number of people. In a monopoly, the sole supplier faces no competition from other firms. The uniques product that the firm sell has no close substitutes. A monopoly control supplies to the market and determines the price of the product.

Entry barriers, such as colossal capital requirement cause the emergence of monopolies. Strategic geographical location and the availability of natural resources can result in natural monopolies. Technological advancements, patents and copyrights may also give rise to monopolies.