Attempts: Average: /1 4. Sources of market power Aa Aa Consider the market for d

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Attempts: Average: /1 4. Sources of market power Aa Aa Consider the market for diamonds. Throughout much of the twentieth century, many people viewed South Africa's De Beers group as a monopoly, because it controlled a large percentage of diamond production and sales. 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 source of a monopolist's market power is barriers to entry-that is, obstacles that make it difficult for competitors to enter the market. Which of the following best describes the source of the monopolist's market power in the preceding scenario? O Economies of scale O Patents O Hard to duplicate resources QNA 3.16 © 2004-2016 Aplia. All rights reserved. © 2013 Cengage Learning except as noted. All rights reserved. Grade It Now Save & Continue Continue without saving

Explanation / Answer

1- now whenever we are taking about the market power the monopoly firm is considered to be the beest example, there are various reasons for a monopoly to apply market power,

in the above scenario we can see that a large production quota of the diamond business was controlled by de beers group means that there were economies of scale, the production level was soo high that they have reduced the average cost to such low levels that the firm was enjoying the economies of scale.

so answer is A

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