A firm that is a \"pure monopoly\" is a seller of a highly advertised and differ
ID: 1207011 • Letter: A
Question
A firm that is a "pure monopoly" is
a seller of a highly advertised and differentiated product in a market with low barriers to entry in the long run.
the only seller of a good for which there are no good substitutes in a market with high barriers to entry.
the only buyer of a unique raw material.
the producer of a product subsidized by the government.
a seller of a highly advertised and differentiated product in a market with low barriers to entry in the long run.
the only seller of a good for which there are no good substitutes in a market with high barriers to entry.
the only buyer of a unique raw material.
the producer of a product subsidized by the government.
Explanation / Answer
A monopoly firm is a single seller in the market selling to a large number of buyers a single non-substitutable product at a price higher than the equilibrium price. Since there are high entry barriers in the industry, other firms are unable to enter the market which leaves the seller the sole producer in the entire industry. It operates for the purpose of profit maximization and thus earns positive economic profits in both long and short run.
Thus, the correct option is: (B)
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