Question

Identify the two criteria necessary for a firm to be a monopoly

Answer 1

Only one firm, which is large in size, exists in a monopolistic market. This one company provides all of the supply for the market. Therefore, there is no distinction between the supply of the business and consumer supply in a monopolistic system.

Monopolistic market system is characterized by three factors.
Firstly, there is only one firm operating on the market.
Second, entry barriers are high. Such barriers are so large they prevent any other business from entering the market.
Third, the monopoly firm produces no close subsitiutes Since there are no close substitutes, there is no competition to the monopoly