What characterizes a monopoly?

A monopoly is characterized by a market structure in which there is a single seller providing a unique product or service for which there are no close substitutes. This singular control means that the monopolist has significant market power, allowing them to set prices above the competitive level and influence overall market supply and demand.

In a monopoly, the absence of competition often results in lower consumer choices and potentially higher prices because the monopolist does not face pressure from other sellers to lower costs or improve services. Monopolies can arise due to various factors, including high barriers to entry that prevent other firms from entering the market, exclusive access to essential resources, or government regulations.

The other options describe characteristics that are not consistent with a monopoly. A market with multiple sellers typically refers to perfect competition or monopolistic competition, where competition drives prices down. A market where the price is determined by competition also indicates multiple sellers are influencing the market dynamics. Lastly, a market where goods are freely traded suggests an environment where buyers and sellers operate without restrictions typically seen in a competitive or free market, which stands in contrast to the controlled nature of a monopoly.