What does the term 'monopoly' describe?

The term 'monopoly' specifically describes a market structure in which a single seller or firm is the sole provider of a particular product or service. This situation allows the monopolist to have significant control over the market, including pricing and availability, which can lead to reduced competition, the potential for higher prices, and less innovation compared to more competitive market structures.

In a monopoly, barriers to entry are typically high, preventing other firms from entering the market and challenging the monopolist’s dominance. This singular control means that the monopolistic firm can set prices above marginal costs, leading to higher profit margins that would not be possible in a more competitive environment.

The other choices highlight different concepts in market structures: multiple sellers indicate competition, equal pricing suggests a perfectly competitive market where many firms operate at equilibrium, and a government-regulated market refers to a scenario where the government intervenes in pricing or production, neither of which align with the definition of a monopoly.