Final answer:
The best description of a monopoly's impact on the market is that prices will be higher and less of the product will be available. A monopolist, having significant market power, sets higher prices to maximize profits, typically yielding less output than would exist under perfect competition.
Step-by-step explanation:
The impact of a monopoly in a market can be significant because the monopolist exercises considerable market power. Given that there are high barriers to entry, a monopolist is the sole provider of a particular product or service, facing no significant competition. This unique position allows the monopolist to dictate the price of its product, often leading to higher prices than would prevail in a competitive market.
The correct answer to the student's question is A) Prices will be higher and less of the product will be available. This is because a monopolistic firm will seek to maximize profits by setting prices where marginal revenue equals marginal costs, which typically results in a higher price and lower quantity supplied compared to perfect competition. The monopoly may also produce less because the product is less available due to lack of competitive pressure to produce more.
If a monopolistic competitor, unlike a pure monopolist, experiences an increase in demand due to a successful advertising campaign, it may respond by increasing both the price and quantity supplied. However, since monopolistic competitors face some competition and have more elastic demands, their price increases will likely be more moderate compared to a pure monopolist.