How is a monopoly defined in economics?

In economics, a monopoly is defined as a market structure in which a single seller dominates the production and sale of a particular product or service, resulting in the absence of competition. This unique position allows the monopolist to control prices and output levels, often leading to higher prices for consumers, reduced choices, and potentially less innovation. Monopolies can arise due to various factors, such as exclusive ownership of a vital resource, government regulation granting exclusive rights, or significant barriers to entry for potential competitors.

The other options represent different market situations. A market with many sellers competing reflects perfect competition rather than a monopoly. A collaborative agreement among competitors refers to collusion or oligopoly, where a few firms might limit competition collectively. A situation where prices are determined by demand can occur in various market structures, including monopolies and competitive markets, but does not capture the essence of a monopoly's defining feature of having one seller dominate the market.