Which one of the following is the most accurate description of a monopolist?

• A. A single seller that controls the entire market supply of a good or service and faces the market demand curve directly.
• B. A firm that competes with many other sellers offering identical products.
• C. A producer whose product has many close substitutes in the market.
• D. A seller that can freely enter and exit the market without barriers.

Answer: (A)

Verified step by step guidance

1. Step 1: Understand the definition of a monopolist. A monopolist is a single seller in a market who controls the entire supply of a particular good or service.
2. Step 2: Recognize that a monopolist faces the market demand curve directly because it is the only supplier, so the quantity it supplies affects the market price.
3. Step 3: Contrast this with perfect competition, where many sellers offer identical products and no single firm can influence the market price.
4. Step 4: Note that a monopolist's product typically has no close substitutes, which gives the firm market power to set prices.
5. Step 5: Remember that barriers to entry prevent other firms from entering the market freely, which is a key characteristic of a monopoly.