In business, what does the term "monopoly" refer to?

The term "monopoly" refers specifically to a market structure where a single entity, such as a company or organization, exerts control over the entire market for a particular good or service. This dominance allows the monopolist to influence prices, dictate market supply, and limit competition by being the sole provider of a product. In a monopolistic market, the absence of rivals can lead to higher prices and reduced consumer choice, as the monopolist does not face competitive pressure to improve quality or lower costs.

In contrast, other options describe different market structures. A market with multiple competitors signifies an oligopoly or perfect competition, which is characterized by many suppliers, encouraging price competition and variety. A market with equal power distribution would imply a balanced number of competitors with no single entity dominating, which aligns more with perfect competition. Lastly, a market with low barriers to entry allows new firms to enter freely, which contradicts the essence of a monopoly, where high barriers to entry prevent new competitors from challenging the market leader's position. Overall, the definition of monopoly distinctly highlights the single-entity control aspect, making it a critical concept in understanding market dynamics.