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Question
Macroeconomics
Posted 10 months ago
All of these are possible reasons for a monopoly to exist EXCEPT which of the following?
Choose 1 answer:
(A) high minimum efficient scale
(B) very high start-up costs
(C) legal barriers to entry
(D) interdependent pricing
(E) ownership of a key resource
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Answer from Sia
Posted 10 months ago
Solution
a
Identification of Incorrect Monopoly Reason: Monopolies are characterized by a single seller in a market with high barriers to entry. Interdependent pricing, however, is a characteristic of oligopolistic markets where a few firms have a significant market share and the actions of one firm can influence the pricing decisions of others
Answer
(D) interdependent pricing
Key Concept
Characteristics of Monopoly vs. Oligopoly
Explanation
Interdependent pricing is not a reason for a monopoly to exist; it is associated with oligopolistic markets where a few firms are aware of and react to each other's pricing and output decisions.
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