In what market structure does a single firm control prices and supply?

In a monopoly market structure, a single firm has complete control over the market, allowing it to dictate both prices and the supply of goods or services. This occurs because the monopolist is the sole provider in the market, facing no direct competition. As a result, the firm can set prices above the competitive market equilibrium, maximizing its profits without the pressure of competitors undercutting its prices.

Monopoly often arises from barriers to entry, where other firms find it difficult or impossible to enter the market due to factors like high startup costs, control of resources, or government regulations. Thus, the monopolistic firm holds significant power over the market, making it the price maker rather than a price taker, as seen in other market structures.

In contrast, the other market structures – monopolistic competition, oligopoly, and pure competition – involve multiple firms either competing with similar products or a few firms sharing the market, all of which limits any single firm’s ability to control prices and supply to the extent found in a monopoly.