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ACCA Applied Knowledge · Business and Technology · Political and legal factors affecting business

Which of the following best describes a monopoly in the context of competition policy?

A monopoly is a market dominated by a single supplier that can largely determine price and output. A few dominant firms describes an oligopoly, and a single dominant buyer describes a monopsony, so those descriptions are different market structures.

  1. AA market in which a single supplier dominates and can largely determine price and outputCorrect
  2. BA market in which a few large firms supply most of the output and watch each other's pricing
  3. CA market in which a single buyer dominates the purchase of a good or service

Explanation

A monopoly exists where one supplier dominates the market and so has substantial power over price and output. The second option describes an oligopoly, and the third describes a monopsony.

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