If a price searcher has barriers to enter and one firm, it is a...

• A. Oligopoly
• B. Monopolistic competition
• C. Competitive market
• D. Monopoly

Answer: (D)

Single seller with barriers to entry means a monopoly. A price searcher can influence the price it charges, unlike a price taker in perfect competition. When there is only one firm and barriers prevent new entrants, that firm faces the entire market demand and can choose a profit-maximizing price-quantity combination by setting marginal revenue equal to marginal cost. The barriers keep others from entering and eroding profits, allowing the monopoly to persist. If there were only a few firms with strategic pricing, that would be an oligopoly; many firms with easy entry and differentiated products describes monopolistic competition; many firms with no entry barriers and a standardized product describes a competitive market. The described scenario best fits a monopoly.