A Level Economics AQA Practice Exam

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What characterizes a monopoly in a market structure?

  1. Many sellers and buyers

  2. One seller and many buyers

  3. Many firms selling identical products

  4. Many sellers with low pricing power

The correct answer is: One seller and many buyers

A monopoly is characterized by one seller dominating the market with many buyers available to purchase its goods or services. This creates a unique position where the single seller has significant control over the price and supply of the product, as they are the only source for that particular good or service. This distinctiveness allows monopolies to influence market conditions and consumers since they lack competition. In contrast, other options might suggest market structures like perfect competition or oligopoly, where multiple sellers exist, diluting individual control over pricing and product offerings.

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