If a good has no close substitutes, the market is likely to be:
A) a monopoly.
B) an oligopoly.
C) monopolistically competitive.
D) perfectly competitive.

Question

Quizplus · Accepted Answer

When a good has no close substitutes, there is no competition in the market. This allows the producer to have control over the price and quantity of the good, resulting in a monopoly. In a monopoly, there is only one seller who dominates the market and there are no close substitutes for the good, giving the producer a significant amount of pricing power.

If a Good Has No Close Substitutes, the Market Is