A firm that holds a monopoly position in the marketplace is:

• A. one of many firms selling identical products
• B. the sole seller of a product with no close substitutes
• C. unable to influence the market price of its product
• D. a firm that faces perfectly elastic demand

Answer: (B)

Verified step by step guidance

1. Step 1: Understand the definition of a monopoly. A monopoly is a market structure where a single firm is the sole seller of a product that has no close substitutes.
2. Step 2: Recognize that in a monopoly, the firm has significant market power, meaning it can influence the market price of its product because it is the only source available to consumers.
3. Step 3: Contrast this with perfect competition, where many firms sell identical products and each firm is a price taker facing perfectly elastic demand.
4. Step 4: Note that a monopolist faces a downward-sloping demand curve, not a perfectly elastic one, because it controls the quantity supplied and thus affects the price.
5. Step 5: Conclude that the correct characterization of a monopoly is 'the sole seller of a product with no close substitutes,' which distinguishes it from other market structures.