Final answer:
A monopoly is best described as a single firm that produces a product with no close substitutes, allowing it to dominate the market and set prices without significant competition.
Step-by-step explanation:
Which of the following best describes a monopoly? The correct answer is B) A single firm makes a product with no close substitutes. A monopoly arises when a single firm is the sole producer of a product for which there are no close substitutes. This situation grants the firm a significant amount of market power, allowing it to set prices without concern for competition, subject to the product's demand curve. For example, Microsoft has been viewed as a monopoly in the operating systems market due to its dominant position.
In the case of monopoly, the firm faces no significant competition because consumers do not have similar alternatives to turn to. It's important to note, however, that the practical use of the term monopoly can also refer to a firm that does not produce all output in the market but has a very high market share, which is often the approach of the U.S. Department of Justice.