CA Foundation · Business Economics · Price Determination in Different Markets
Which of the following market structures is characterised by a single seller, no close substitutes and significant barriers to entry, so that the seller is a price maker?
Monopoly is the market structure with a single seller, no close substitutes and strong entry barriers. Because the firm is the only supplier, it is a price maker. Oligopoly has a few sellers and monopolistic competition has many, so those do not fit.
- APerfect competition
- BMonopolyCorrect
- CMonopolistic competition
- DOligopoly
Explanation
A monopoly has one seller of a product with no close substitutes, and entry is blocked. This gives the firm control over price. Oligopoly has a few sellers and monopolistic competition has many sellers with differentiated products, so neither matches the description.
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