Which of the following is a main characteristic of a pure monopoly?

• A. A single seller controls the entire market supply of a product
• B. Products are highly differentiated
• C. Firms can freely enter and exit the market
• D. There are many firms competing 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. Identify the key characteristics of a pure monopoly, such as having a single seller, high barriers to entry, and the firm being a price maker.
3. Analyze each option given in the problem: 'A single seller controls the entire market supply of a product' aligns with the definition of a pure monopoly.
4. Recognize that 'Products are highly differentiated' is more typical of monopolistic competition, not pure monopoly where the product is unique.
5. Note that 'Firms can freely enter and exit the market' and 'There are many firms competing in the market' describe perfectly competitive or monopolistic competitive markets, not a pure monopoly.