A Local Electricity-Generating Company Has a Monopoly That Is Protected

question 51

Multiple Choice

A local electricity-generating company has a monopoly that is protected by an entry barrier that takes the form of

• A) control of a key raw material.
• B) network externalities.
• C) economies of scale.
• D) perfectly inelastic demand curve.

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Definitions:

Syndicate

A group of individuals or firms that join together to finance a project; also called an investment group.

Corporation

A legal entity that is separate from its owners, offering limited liability to its shareholders, and able to own property, enter contracts, and sue or be sued.

Partnership

A legal arrangement where two or more individuals share ownership of a business, including its liabilities and profits.

Cooperative

An association, which may or may not be incorporated, that is organized to provide an economic service to its members. Unincorporated cooperatives are often treated like partnerships for tax and other legal purposes.