What is an economic monopoly?

• A. A market dominated by multiple firms
• B. A single firm controlling an entire market
• C. A cooperative agreement between businesses
• D. A market with equal competition

Answer: (B)

An economic monopoly refers to a situation where a single firm controls an entire market for a particular product or service. This means that the monopolistic firm is the sole provider, leading to a lack of competition within that market. In this scenario, the firm has significant control over pricing and supply, often resulting in higher prices and reduced options for consumers.

This control can arise for various reasons, such as ownership of key resources, patents, regulatory advantages, or significant market advantages that prevent other firms from entering the market. Essentially, in a monopoly, consumers have little to no choice except to purchase from the monopolistic company, which can impact both market dynamics and consumer welfare.

The other options describe market structures characterized by competition or cooperation, which are fundamentally different from a monopoly's lack of competition. For instance, a market dominated by multiple firms indicates competition rather than a single entity controlling the entirety of the market. Similarly, cooperative agreements and markets with equal competition also do not fit the definition of a monopoly, as they imply the presence of competition and collaborative strategies rather than exclusive control.