What is a monopoly?

A monopoly is defined as a market structure dominated by a single seller. In such a market, the single seller has significant control over the price and supply of the product or service they offer, making it unlike competitive markets where multiple sellers vie for the same customer base. This dominance allows the monopolistic entity to set prices above marginal cost, leading to reduced consumer choice and often higher prices for consumers. Monopolies can arise due to various reasons, such as unique resources, government regulations, or technological advantages that prevent other competitors from entering the market. Understanding this concept is crucial in economics as it highlights issues related to market power, efficiency, and consumer welfare.