Identify the truthfulness of the following statements.

I.

A monopoly market consists of a single seller facing many buyers.

II.

Because the monopolist is the only seller of her product, she may sell any quantity that she chooses for any given price.

Question

Identify the truthfulness of the following statements.

I.
	
A monopoly market consists of a single seller facing many buyers.

II.
	
Because the monopolist is the only seller of her product, she may sell any quantity that she chooses for any given price.

BlackTom AI · Accepted Answer

Consider the two statements separately and evaluate them against basic monopoly/market structure concepts.

Option 1: Both I and II are true.
- For I: A monopoly market is defined as having a single seller and many buyers. This description matches the standard model of a monopoly, where there is one firm plus a large pool of consumers.
- For II: The claim that the monopolist may sell any quantity she chooses for any given price is incorrect. In a monopoly, the firm faces the market demand curve, which is downward sloping. To sell more units, the monopolist generally must lower the price, and at a given price, there is a specific quantity demanded. Therefore, the assertion that she can choose any quantity at a given price contradicts how demand constrains quantity at a given price.
Thus, Option 1 is inconsistent with the standard analysis because II is false.

Option 2: Both I and II are false.
- I is true in the monopoly framework, as explained above. Therefore this option mislabels I as false, which makes this choice incorrect.

Option 3: I is true; II is false.
- I is true, since a monopoly consists of a single seller facing many buyers.
- II is false for the reason just discussed: the monopolist cannot freely choose any quantity at a given price due to the downward-sloping demand curve; quantity demanded at a given price is determined by consumers, not by the monopolist alone.
This option accurately separates the true and false assessments.

Option 4: I is false; II is true.
- This flips the truth values incorrectly: I is not false, so this option misstates the fundamental structure of a monopoly. Additionally, II is not true for the same reason as above, so this option is doubly incorrect.

In summary, the only option that correctly states the truth is the one asserting that I is true and II is false, because monopolies feature a single seller with many buyers, and the quantity sold at a given price is constrained by the downward-sloping demand curve rather than being freely chosen by the monopolist.

ECON_104B_001_25S Chapter 11 Practice Problems -- Multiple-Choice

Identify the truthfulness of the following statements. I. A monopoly market consists of a single seller facing many buyers. II. Because the monopolist is the only seller of her product, she may sell any quantity that she chooses for any given price.

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