A monopolist, unlike a competitive firm, has some market power. It can raise its price, within limits, without the quantity demanded falling to zero. The main way it retains its market power is through barriers to entry-that is, other companies cannot enter the market to create competition in that particular industry. Complete the following table by indicating which barrier to entry appropriately explains why a monopoly exists in each scenario. Scenario At the national level, the Federal Communications Commission licenses only a certain number of radio and television stations in each geographic area. In the electricity industry, low average total costs are obtained only through large-scale production. In other words, the initial cost of setting up all the necessary wiring makes it risky and, most likely, unprofitable for competitors to enter the market. Throughout much of the 20th century, many people viewed South Africa's De Beers Group as a monopoly because it controlled a large percentage of diamond production and sales. Barriers to Entry Exclusive Ownership of Government- a Key Created Resource Monopolies Economies of Scale

ENGR.ECONOMIC ANALYSIS
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1. Sources of monopoly power
A monopolist, unlike a competitive firm, has some market power. It can raise its price, within limits, without the quantity demanded falling to zero.
The main way it retains its market power is through barriers to entry-that is, other companies cannot enter the market to create competition in that
particular industry.
Complete the following table by indicating which barrier to entry appropriately explains why a monopoly exists in each scenario.
Scenario
At the national level, the Federal Communications Commission licenses only a certain number
of radio and television stations in each geographic area.
In the electricity industry, low average total costs are obtained only through large-scale
production. In other words, the initial cost of setting up all the necessary wiring makes it risky
and, most likely, unprofitable for competitors to enter the market.
Throughout much of the 20th century, many people viewed South Africa's De Beers Group as
a monopoly because it controlled a large percentage of diamond production and sales.
Barriers to Entry
Exclusive
Ownership of
a Key
Resource
Government-
Created
Monopolies
O
Economies
of Scale
Transcribed Image Text:1. Sources of monopoly power A monopolist, unlike a competitive firm, has some market power. It can raise its price, within limits, without the quantity demanded falling to zero. The main way it retains its market power is through barriers to entry-that is, other companies cannot enter the market to create competition in that particular industry. Complete the following table by indicating which barrier to entry appropriately explains why a monopoly exists in each scenario. Scenario At the national level, the Federal Communications Commission licenses only a certain number of radio and television stations in each geographic area. In the electricity industry, low average total costs are obtained only through large-scale production. In other words, the initial cost of setting up all the necessary wiring makes it risky and, most likely, unprofitable for competitors to enter the market. Throughout much of the 20th century, many people viewed South Africa's De Beers Group as a monopoly because it controlled a large percentage of diamond production and sales. Barriers to Entry Exclusive Ownership of a Key Resource Government- Created Monopolies O Economies of Scale
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