Chapter 13, Problem 1P

To determine

To find:

Whether the given option is a monopoly or not.

Answer to Problem 1P

The option a. Mrs. K (an actress), option b. DB Diamond Company and option c. The only doctor in a small town can be considered as monopoly.

Explanation of Solution

Mrs. K (an actress), DB Diamond Company and the only doctor in a small town, all these hold the characteristics of a monopoly firm. Mr. K is not the only actress, but she has a monopoly over her service or acting and she has full control over the price of her service. Similarly, the DB diamond company enjoys the largest market share of the world. Hence, the diamond company can be considered as monopoly.

The only doctor in a small town has a monopoly and he or she is the single seller of the service. Hence, the doctor can enjoy all the market share. Thus, the doctor can be considered as monopoly.

The F motor company cannot be a monopoly, it can be oligopoly. This type of company is not the only single seller in the market. However, in field of motor companies there are very few companies and they sell almost close substitutes. Hence, it is a case of oligopoly.

Economics Concept Introduction

Monopoly market:

Monopoly refers to that market structure, where a single seller enjoys the largest market share along with many buyers and the product sold by monopoly have no close substitutes. In the monopoly market, the seller is free to charge any price for their product and the entry of new firms in this market is very difficult.