Which of the following is most likey to be monopolistic? the clothing retailer w
ID: 1111298 • Letter: W
Question
Which of the following is most likey to be monopolistic?
the clothing retailer with the best location in a mail
the grocery store in a large city
the most popular hot dog vender on a city street corner
the one grocery store in a small town
Which of the following industires does not fit the natural monopoly medel?
Electrictiy
Cable TV
Fast food restaurant
Natural Gas
Lou's college bookstore carries all of the texts required for every class, organized by coure number. Lou went to the bookstore to see what was requried, added up the cost of those texts and found that they will cost a total of $500 this semester. Identical books are available online for a total of $400. Lou decides to order all of the book online. Part of this price difference is dut to
the imformation one can only get at the bookstore
higher quality products at the bookstore
the bookstore's ignorance of the internet prices
the fact that internet texts are probabaly stolen
Which of the following woud be an external benefit?
pollution in a stream from a manufacturing precess
an oil spill
abundance of a carnivorous fish species around a crab cleaning facility
purification of sewer water after being used to grow platnes in a hydroponic garden/
Explanation / Answer
(1) Following is monopolistic:
- The one grocery store in small town (Since this is the single seller in grocery market)
(2) Fast food restaurant does not fit into natural monopoly (Since barriers to entry is too low due to low fixed costs, there are likely to be more than one sellers in fast food market)
(3) Part of this price difference is due to: Higher quality products at bookstore (Quality is a product differentiator)
(4) Example of external benefit is:
- Purification of sewer water after being used for growing plants (Since this will create benefits for other neighbors who are not paying for the purification process)
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