Which of the following is a characteristic of a monopoly?

• A. Firms in the market sell identical products.
• B. There is only one seller in the market.
• C. There are no barriers to entry.
• D. Firms are price takers.

Answer: (B)

Verified step by step guidance

1. Understand the definition of a monopoly: A monopoly is a market structure where there is only one seller or producer that controls the entire supply of a product or service.
2. Analyze the options given: Identify which characteristics align with the monopoly definition. For example, 'firms in the market sell identical products' is typical of perfect competition, not monopoly.
3. Consider the number of sellers: In a monopoly, there is only one seller, which means no competition exists in the market for that product.
4. Evaluate barriers to entry: Monopolies usually have high barriers to entry, preventing other firms from entering the market, so 'there are no barriers to entry' is incorrect for a monopoly.
5. Assess pricing power: Monopolies are price makers, meaning they can influence the price of their product, unlike price takers in competitive markets.