Which of the following is not a necessary characteristic of monopolies?

a) prices are set by the seller not the consumer.

b) there is just one firm in the role of seller.

c) the market is for a unique product without a close substitute.

d) the government plays a role in maintaining barriers to entry.

e) the seller has a high level of market power.

• Answer is d) the government plays a role in maintaining barriers to entry.

In a monopoly market, there is only one seller in the market with many buyers. The government is not necessarily needed to maintain barriers to entry since we have naturally occurring monopolies. The high fixed costs and control of critical resources by one firm can make potential firms have difficulty in entering the market. Also, a monopoly seller has the ability to control the price since he offers a product with no close substitute and he is said to have a high level of market power.