When there is only one buyer and only one seller of a particular product in a market, the situation is technically known as which one of the following?

Introduction / Context:
Market structure is a core topic in microeconomics. Different names are given to markets depending on how many buyers and sellers they contain. You may already know monopoly, where there is one seller and many buyers, and monopsony, where there is one buyer and many sellers. This question goes one step further and asks what we call a situation where there is only one buyer and only one seller facing each other in a particular market.

Given Data / Assumptions:
- There is a single seller of a product in the relevant market.
- There is also a single buyer for that product in the same market.
- Other possible buyers and sellers are not considered, so effectively one firm and one customer interact with each other.
- You must choose the correct technical term for this combined situation.

Concept / Approach:
A monopoly is one seller facing many buyers. A monopsony is one buyer facing many sellers. When both sides are restricted to a single participant, we have a mixture of these features. The term used in industrial organisation theory is bilateral monopoly. In a bilateral monopoly, the monopolist seller and the monopsonist buyer bargain over price and quantity. The outcome depends on bargaining power, negotiated contracts and sometimes government regulation. Therefore, we should look for the option that explicitly mentions bilateral monopoly, as that is the standard name for one buyer and one seller facing each other.

Step-by-Step Solution:
Step 1: Examine option A, public monopoly. This usually refers to a monopoly owned or controlled by the government, such as a public utility, and does not say anything about the number of buyers.Step 2: Examine option B, bilateral monopoly. The word bilateral means two sided. In economics, a bilateral monopoly exists when there is a single seller with monopoly power and a single buyer with monopsony power in the same market.Step 3: Examine option C, franchised monopoly. This refers to a private firm given exclusive rights to supply a market by the government, for example through a franchise agreement, but it again does not limit the number of buyers.Step 4: Examine option D, monopsony. A pure monopsony is one buyer facing many sellers, not just one seller, so this does not match the information in the question.

Verification / Alternative check:
You can quickly verify your answer by linking the word parts. Mono refers to one, poly to many, and bilateral to two sides. A bilateral monopoly therefore emphasises that both sides of the market have a single dominant participant. This is different from simple monopoly or monopsony. In policy discussions, bilateral monopoly is often used to analyse negotiations between a major employer and a major trade union or between a dominant supplier and a dominant buyer.

Why Other Options Are Wrong:
Public monopoly is wrong because it focuses on ownership, not on the number of buyers. Franchised monopoly is wrong because it describes a granted exclusive right, again without limiting buyers. Monopsony is wrong because it only captures the one buyer part, not the one seller part.

Common Pitfalls:
A frequent mistake is to choose monopsony simply because the phrase one buyer appears in the stem. However, the question clearly states there is also only one seller, so monopsony alone is incomplete. Another error is to think that any market with one seller must be a monopoly, ignoring the role of the buyer side. Careful reading of both the buyer and seller conditions helps to avoid such confusion.

Final Answer:
The situation with only one buyer and one seller of a product is called a Bilateral monopoly.