Question : When there is only one buyer and one seller of a product, it is called a ____ situation.
Option 1: public monopoly
Option 2: bilateral monopoly
Option 3: franchised monopoly
Option 4: monopsony
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Correct Answer: bilateral monopoly
Solution : The correct answer is Bilateral monopoly .
When there is only one supplier and one buyer in the market, there is a bilateral monopoly. The one supplier will typically behave like a monopolistic power and try to charge the sole buyer high prices. The sole purchaser will aim to make the lowest payment possible. Due to their divergent objectives, the two parties must negotiate a final price that falls between their respective points of maximum profit.
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