How does monopoly arise? What will be an ideal ...

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How does monopoly arise?
 
  What will be an ideal response?

Question 2

Refer to Figure 3-6. The figure above represents the market for canvas tote bags. Compare the conditions in the market when the price is 50 and when the price is 35. Which of the following describes how the market differs at these prices?
 
  A) The difference between quantity supplied and quantity demanded is greater at 50 than at 35.
  B) At each price there is a surplus; firms will lower the equilibrium price in order to eliminate the surplus.
  C) At each price the supply of tote bags exceeds that demand for tote bags.
  D) At each price there is a surplus; the surplus is greater at 35 than at 50.

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Answer to Question 1

Monopoly arises if a firm is selling a good that has no close substitutes and if the firm is protected from competition by a barrier to entry. As a result, a monopoly is the only firm in its market.

Answer to Question 2

A

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Gracias!

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