Social Studies Praxis Practice Test

A market structure in which there is a single seller producing a product for which there are no close substitutes is known as

1. A. perfect competition

2. B. monopolistic competition

3. C. monopoly

4. D. oligopoly

The correct answer is: C. monopoly

The correct answer describes a market structure known as a monopoly. In a monopoly, a single seller dominates the market and is the only provider of a particular good or service, which means there are no close substitutes available for consumers. This unique position allows the monopolist to have significant control over the price and supply of the product, often leading to higher prices and decreased consumer choice compared to more competitive market structures. Monopolies can arise due to various factors including high barriers to entry for other firms, exclusive access to resources, or government regulations that grant a single entity the rights to operate in a certain market. By contrast, other market structures feature multiple sellers or significant competition, impacting how prices and availability are determined. This distinction is what sets a monopoly apart in the economic landscape.