Which best describes the availability of substitutes in a monopoly?

• A. Substitutes are available, but they are perfect substitutes.
• B. There are no close substitutes for the monopolist's product.
• C. Substitutes are available only if the monopolist sets a low price.
• D. There are many close substitutes available in the market.

Answer: (B)

Verified step by step guidance

1. Understand the concept of a monopoly: A monopoly is a market structure where a single firm is the sole producer of a product with no close substitutes.
2. Recall the definition of substitutes: Substitutes are products that consumers can use in place of another product, typically leading to competition between firms.
3. Analyze the nature of substitutes in a monopoly: Since the monopolist is the only supplier, there are no close substitutes available for its product, which gives the monopolist significant market power.
4. Evaluate the given options: The correct description should reflect the absence of close substitutes, as this is a key characteristic of monopoly markets.
5. Conclude that the best description is: 'There are no close substitutes for the monopolist's product,' because this explains why the monopolist can control price without losing all customers to competitors.