CA Foundation · Business Economics · Price Determination in Different Markets
A market has one seller of a product with no close substitutes, and entry of other firms is blocked by a government licence. Which market form does this describe?
This is a monopoly. A single seller supplies a product with no close substitutes, and the government licence blocks entry of rivals. These three features, one seller, no substitutes and barriers to entry, define monopoly, unlike markets with many or a few sellers.
- AMonopolyCorrect
- BMonopolistic competition
- COligopoly
- DPerfect competition
Explanation
A single seller, no close substitutes and barriers to entry are the defining features of pure monopoly. Monopolistic competition and perfect competition have many sellers, and oligopoly has few sellers.
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