Asked by Camille Esselin on Jun 13, 2024
Verified
Which is the most accurate statement?
A) All monopolists are very large companies.
B) IBM is an example of a monopoly.
C) In order to maintain monopolies,there must be barriers to market entry.
D) Nearly all monopolies are very profitable.
E) Public utilities are examples of natural monopolies.
Barriers to Market Entry
Obstacles that make it difficult for a new firm to enter an industry, which might include high start-up costs, strict regulations, or established brand loyalty.
Public Utilities
Companies that provide essential services like water, electricity, natural gas, and telecommunications to the public, often under government regulation.
- Identify the significance of economies of scale and the presence of natural monopolies within the industry.
Verified Answer
MS
Malika SabharwalJun 20, 2024
Final Answer :
E
Explanation :
Public utilities, such as electricity and water providers, are examples of natural monopolies because it is more efficient to have one provider servicing an entire area rather than having multiple providers competing with one another. This is because there are high fixed costs associated with establishing the necessary infrastructure and reducing duplication can lead to cost savings.
Learning Objectives
- Identify the significance of economies of scale and the presence of natural monopolies within the industry.
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