A monopoly exists when a specific person or enterprise is the only

Here are the official Explanations of all the questions.

1- This question should be treated much like a normal primary purpose question. (A) is a difficult incorrect answer choice. While the paragraph does point out several differences of the three market structures, the whole second part of the paragraph focuses on similarities among the three structures (how they all distort market interactions). As a result, (A) does not properly capture the purpose of the paragraph. (B) does the opposite – it focuses on the similarities without noting the importance of the distinctions in the paragraph. (C) describes it perfectly – the paragraph is there to highlight some distinctions and shared characteristics. For (D), the explanation of when monopolies are illegal is found in the other two paragraphs, but not in this one. For (E), this paragraph is not used to introduce what a monopoly is, and the paragraph is only used to distinguish it from two other constructs, not “other businesses.” Correct answer is (C).

2- To get this problem correct, you must first understand the difference between the two terms from the passage. In a monopoly, a company controls most of its market, and in a monopsony, a company controls its supplier market. The correct answer will be one that describes a monopsony, but NOT a monopoly. In (A), you have a situation that is unlikely to be a monopoly, but you have no idea if it is a monopsony. Just because a company has only one supplier, that does not mean the company has control over that supply market and represents a monopsony. In (B), you have the exact situation required. The situation is clearly not a monopoly because the retail prices are so low (in a monopoly the company has control of the market and takes advantage with pricing), but the company has a stranglehold on the supplier’s market, constituting a monopsony. In (C) the situation is not a monopoly (it is an oligopoly), but a monopsony also does not exist. In both (D) and (E), you have both a monopoly and a monopsony, so that does not meet the conditions in the question. Answer is (B).

3- For (A), you learn in the passage that “Patents, copyright, and trademarks are sometimes used as examples of government granted monopolies.” Those government granted monopolies would indeed be legal. However, that does not exclude the possibility that MANY other monopolies developed through patents and trademarks are illegal, so (A) is not inferable. (B) is directly contradicted in the passage as you learn in the second paragraph that they may exist together. For (C) you know that some monopolies can be illegal but you have no idea whether “most” are and how many incur government sanctions. In the first paragraph you learn that there is a difference in definition between a monopoly in an economic sense (single seller) and a monopoly in a legal sense (one with market power and the ability to control prices). Therefore (D) must be true based upon that difference in definition. For (E), the difference in definition between the two (monopoly and oligopoly) relates to whether multiple companies control the market together and does not relate to the degree of influence over the market. Answer is (D).

Hope this helps. All the best!