What is the term for a situation where a single firm controls the market price?

The correct answer is Monopoly. A monopoly refers to a market structure where a single firm has exclusive control over a particular good or service, which allows it to determine the price without any direct competition. This situation typically arises when there are high barriers to entry for other firms, meaning that new competitors cannot easily enter the market and challenge the monopolist. Because of this control, the monopolist can set prices higher than in more competitive markets, leading to potentially higher profits at the expense of consumer choice and welfare.

In contrast, the other market structures involve varying degrees of competition. Oligopoly consists of a few firms dominating the market, which can lead to collusion but does not provide the same level of price control as a monopoly. Monopolistic competition features many firms that sell similar but not identical products, leading to some level of price competition among them. Pure competition describes a market where numerous firms offer identical products, meaning that no single firm can influence the market price significantly. Each of these alternatives allows for more competition and consumer choice, distinguishing them from the monopolistic situation.