Which of the following is a characteristic of a monopoly?

• A. There are no barriers to entry for new firms.
• B. Firms in the market are price takers and face perfectly elastic demand.
• C. Products sold are identical and undifferentiated.
• D. A single firm dominates the market and is the sole producer of a good or service.

Answer: (D)

Verified step by step guidance

1. Understand the definition of a monopoly: it is a market structure where a single firm is the sole producer and seller of a product or service with no close substitutes.
2. Identify key characteristics of a monopoly, such as high barriers to entry that prevent other firms from entering the market.
3. Recognize that monopolies are price makers, meaning they have control over the price because they are the only supplier, unlike price takers in perfectly competitive markets.
4. Note that products in a monopoly are unique or have no close substitutes, which differentiates them from perfectly competitive markets where products are identical and undifferentiated.
5. Compare the given options to these characteristics and select the one that correctly describes a monopoly: a single firm dominates the market and is the sole producer of a good or service.