What defines a monopoly in a market structure?

What defines a monopoly in a market structure?

• A. A situation with many sellers offering similar products
• B. A market where one seller dominates
• C. A balance between supply and demand
• D. A market with government regulation

Answer: (B)

A monopoly is defined by a market structure where one seller dominates the entire market, fundamentally controlling the supply of a particular good or service. In this scenario, the monopolist has significant power to set prices and regulate the availability of the product, often leading to limited competition. This dominance allows the monopolist to potentially influence market conditions, such as pricing strategies and quantity supplied, without concern for competition, as there are no other sellers of that good or service. In contrast, a situation with many sellers offering similar products reflects a competitive market rather than a monopoly. A balance between supply and demand indicates a healthy market rather than the dominance of a single seller. Lastly, while government regulation can be involved in various market structures, it does not directly define a monopoly. Regulation may be a response to the existence of monopolies, aiming to promote fair competition and protect consumers, but it is not a characteristic that defines a monopoly itself.

A monopoly is defined by a market structure where one seller dominates the entire market, fundamentally controlling the supply of a particular good or service. In this scenario, the monopolist has significant power to set prices and regulate the availability of the product, often leading to limited competition. This dominance allows the monopolist to potentially influence market conditions, such as pricing strategies and quantity supplied, without concern for competition, as there are no other sellers of that good or service.

In contrast, a situation with many sellers offering similar products reflects a competitive market rather than a monopoly. A balance between supply and demand indicates a healthy market rather than the dominance of a single seller. Lastly, while government regulation can be involved in various market structures, it does not directly define a monopoly. Regulation may be a response to the existence of monopolies, aiming to promote fair competition and protect consumers, but it is not a characteristic that defines a monopoly itself.