Question

For a pure monopoly to exist,

A. there is a single seller in a particular industry
B. there is only one seller, therefore no industry
C. there are a few sellers in a given industry
D. there are limited sellers in a particular industry

Answer 1

A pure monopoly exists when there is a single seller in a particular industry and significant barriers to entry prevent others from entering the market. Examples include utility companies where government may allow monopolies due to efficiency and infrastructure costs, often regulating prices.

Step-by-step explanation:

For a pure monopoly to exist, the correct answer is A. there is a single seller in a particular industry. This situation arises when a single firm controls the market for a product or service that has no close substitutes, and there are significant barriers preventing other firms from entering the market. An example of a monopoly could be a utility company providing water services where it is more efficient for one company to supply all the output due to the high costs associated with infrastructure. Government regulations may allow such natural monopolies to exist but typically enforce price controls.