Question

“Since there are no close substitutes for the monopoly's product, the monopoly can charge
any price it wishes”.Is it a true or false statement? Give your reasons. (

Answer 1

This is a true statement.

This is because in a monopoly the goods are differentiated and have no close substitutes. For this reason, the monopolies are price makers and not takers. They set a price at a point they can be able to maximize their profits