Which of the following is a characteristic of a monopoly?

• A. There is only one seller in the market.
• B. There are no barriers to entry.
• C. Products are perfectly substitutable.
• D. Firms in the market are price takers.

Answer: (A)

Verified step by step guidance

1. Understand the definition of a monopoly: A monopoly is a market structure where a single firm is the sole seller of a product with no close substitutes.
2. Identify the key characteristics of a monopoly: These include having only one seller, high barriers to entry preventing other firms from entering the market, and the firm being a price maker rather than a price taker.
3. Analyze each option given in the problem: 'There is only one seller in the market' aligns with the monopoly definition; 'There are no barriers to entry' contradicts the monopoly characteristic; 'Products are perfectly substitutable' applies more to perfect competition; 'Firms in the market are price takers' also applies to perfect competition, not monopoly.
4. Conclude that the correct characteristic of a monopoly is that there is only one seller in the market, as this is the defining feature distinguishing it from other market structures.
5. Remember that monopolies have market power to set prices because they face no direct competition, unlike firms in perfectly competitive markets.