What is a key characteristic of a monopoly in economic terms?

What is a key characteristic of a monopoly in economic terms?

• A. High competition among producers
• B. Exclusive control over market prices
• C. Multiple firms controlling a single market
• D. Government regulation of all pricing

Answer: (B)

A key characteristic of a monopoly is its exclusive control over market prices. In a monopolistic market structure, a single firm is the sole producer of a product or service, which means it can dictate the price without facing competition. This lack of competition allows the monopolist to set prices higher than what would typically be possible in a market with multiple competing suppliers, leading to potentially higher profits. In contrast, high competition among producers indicates a market with many firms, each influencing the price through competition, which is not compatible with the definition of a monopoly. Similarly, the presence of multiple firms controlling a single market would suggest an oligopoly or a competitive market, not a monopoly. Finally, while government regulation can affect pricing in certain sectors, it is not a defining characteristic of monopolies, which are defined primarily by the lack of competitors rather than regulatory influences.

A key characteristic of a monopoly is its exclusive control over market prices. In a monopolistic market structure, a single firm is the sole producer of a product or service, which means it can dictate the price without facing competition. This lack of competition allows the monopolist to set prices higher than what would typically be possible in a market with multiple competing suppliers, leading to potentially higher profits.

In contrast, high competition among producers indicates a market with many firms, each influencing the price through competition, which is not compatible with the definition of a monopoly. Similarly, the presence of multiple firms controlling a single market would suggest an oligopoly or a competitive market, not a monopoly. Finally, while government regulation can affect pricing in certain sectors, it is not a defining characteristic of monopolies, which are defined primarily by the lack of competitors rather than regulatory influences.