Which phrase would be most characteristic of a pure monopoly?

• A. Single seller controls the entire market supply
• B. Many firms compete with identical products
• C. Firms are price takers
• D. Free entry and exit in the market

Answer: (A)

Verified step by step guidance

1. Understand the definition of a pure monopoly: it is a market structure where a single firm is the sole seller of a product with no close substitutes.
2. Recall that in a pure monopoly, the single seller controls the entire market supply, meaning there are no competitors offering the same product.
3. Contrast this with perfect competition, where many firms compete with identical products and firms are price takers due to the high level of competition.
4. Note that free entry and exit in the market is a characteristic of perfectly competitive markets, not monopolies, where barriers to entry exist.
5. Therefore, the phrase 'Single seller controls the entire market supply' best describes a pure monopoly.