What is a monopoly?

A monopoly is defined as a market structure that is dominated by a single seller or producer, which means that one entity has control over the entire supply of a particular good or service in the market. This can lead to a lack of competition, allowing the monopolist to set prices and production levels without concern for competitors, which can significantly impact consumer choice and market dynamics.

In a monopoly, the seller can influence market conditions and may engage in price setting because there are no alternatives available to consumers. This can result in higher prices and reduced innovation, as there is less motivation to improve products or services when competition is absent.

The other options represent different market structures or conditions. For instance, a market with many sellers competing describes perfect competition, whereas a freely functioning market with no regulations refers to laissez-faire capitalism. A government-run business does not fit the definition of a monopoly, which pertains specifically to private market structures. Understanding the characteristics of a monopoly is essential for comprehending economic principles and their implications in real-world scenarios.