What defines a monopoly?

A monopoly is defined by the presence of a single seller controlling the entire market for a particular good or service. This unique position allows the monopolist to dominate market decision-making, set prices without competitive pressure, and influence supply levels. Monopolies often arise due to significant barriers to entry, such as high startup costs or regulatory challenges, which prevent other competitors from entering the market.

In contrast, the other choices describe market structures where multiple firms are present. The first choice refers to monopolistic competition, characterized by many sellers offering differentiated products. The second choice highlights a market with many substitutes, emphasizing competition rather than monopoly. The last option describes an oligopoly, where a few sellers might collaborate or compete, but still do not control the market entirely. Hence, the defining characteristic of a monopoly is its singular control over the market.