Which of the following statements is not a feature of a monopoly?

Answer Details

The statement that is not a feature of a monopoly is that buyers and sellers are price takers. This characteristic belongs to perfect competition, not to monopoly.

In a monopoly, there is only one seller who has significant market power. Because the monopolist faces no competition, it is a price maker, not a price taker. The monopolist can set the price of the commodity by controlling the quantity supplied, since consumers have no alternative supplier to turn to.

The phrase "buyers and sellers are price takers" describes perfect competition, where there are so many buyers and sellers that no single participant can influence the market price. Everyone simply accepts ("takes") the price determined by overall market supply and demand.

The other three statements are genuine features of monopoly:

• New entrants are restricted - barriers to entry (patents, high capital requirements, government regulation, control of essential resources) prevent other firms from entering the market.
• There is only one seller of the commodity - this is the defining characteristic of monopoly.
• The seller is allowed to fix the price - because there is no competition, the monopolist has the power to set prices.