A statement that best reflects an evaluation of monopoly firms is that: Select one:

a. they have a great deal of market power.

b. they are economically efficient.

c. consumers are given more choices, lower costs, and higher quality.

d. competition should replace all monopolies.

The correct answer is (A).

In the monopoly, firms enjoy market power. Since they are the sole provider of goods and services, and more so, their products have no close substitute, they tend to have the market influence. In this case, they are the determinants of the market prices since they are price makers. The source of their market power is that there is no competition in a monopoly market. Whatever the price they set, the consumer will have to adhere or do without the services since monopoly products have no close substitutes.