Kim's Restaurant: The Only Pizza Place in Town

The Concept of Monopoly

In economics, a monopoly is a market structure where there is only one seller of a unique product with no close substitutes. The seller has complete control over the supply and price of the product.

Suppose Kim owns the only restaurant in town that serves pizza. Other restaurants serve hamburgers, tacos, and fried chicken. If in the long run, Kim's restaurant continues to be the only one selling pizza and is earning economic profits, is Kim's restaurant considered a monopoly?

Answer:

Yes, the given statement is true. If Kim is earning economic profits, then under the broad definition, Kim's Restaurant is a Monopoly.

Explanation: Monopoly is one of the market structures where there is only one seller of the product. This product is unique, and there is no other manufacturer of that product. In a monopoly, there is no competition faced by the seller.

When Kim's restaurant is the only one in town selling pizza without any close substitutes, it means that Kim's restaurant has a monopoly in the town. There is no competition faced by Kim's restaurant as there is no close substitute for pizza in the town.

Kim's Restaurant is the only one in town selling pizza. If Kim is earning economic profits, is Kim's restaurant considered a monopoly?

Yes, if Kim is earning economic profits, then under the broad definition, Kim's Restaurant is a Monopoly. In a monopoly, there is only one seller of a unique product with no close substitutes.

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