Which of the following reasons explains why a professional sports team can be considered a monopoly?

• A. It is the sole supplier of a particular sport in a given geographic area, facing no direct competition.
• B. It can freely enter and exit the market without any barriers.
• C. It operates in a market with perfect information and many buyers and sellers.
• D. It sells identical products as many other teams in the same city.

Answer: (A)

Verified step by step guidance

1. Step 1: Understand the definition of a monopoly in microeconomics. A monopoly exists when a single firm is the sole supplier of a good or service in a particular market, facing no direct competition.
2. Step 2: Analyze the characteristics of the professional sports team in the context of the market. Consider whether the team is the only provider of that sport in a specific geographic area.
3. Step 3: Evaluate the options given in the problem. Identify which option aligns with the monopoly definition, focusing on the exclusivity of supply and lack of direct competitors.
4. Step 4: Recognize that the ability to freely enter and exit the market without barriers contradicts monopoly conditions, as monopolies typically have high entry barriers.
5. Step 5: Conclude that the correct reason is that the professional sports team is the sole supplier of a particular sport in a given geographic area, facing no direct competition, which fits the monopoly criteria.