What is a monopoly?

A monopoly is defined as a market structure where a single seller dominates the entire market for a particular good or service. This scenario occurs when one company or entity has significant control over the supply and pricing of a product, often due to the lack of competition. The monopolist can influence market conditions, setting prices higher than in competitive markets, and can maintain that control through various barriers to entry, such as high startup costs, exclusive access to resources, or government regulations.

In contrast, other market structures involve multiple sellers, leading to competitive pricing and lower profit margins. A competitive environment typically features many market participants, which drives prices down as sellers vie for consumers' business. Choices referring to many sellers, competitive pricing, or no barriers to entry do not accurately capture the essence of a monopoly, which is characterized by singular dominance in the market.