BUSINESS ADMINISTRATION
BUSINESS ECONOMICS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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A Starbucks across from Dunkin Donuts
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A gas station in a town by itself
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3 fast food restaurants all on the same street
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A Sainsbury’s 4 miles away from a Tesco’s
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Detailed explanation-1: -a local electricity company is the most likely example of a monopoly. The generation of electricity requires huge investments of capital. Thus, players avoid entering such type of a market.
Detailed explanation-2: -For example, the utility industry is a natural monopoly. The utility monopolies provide water, sewer services, electricity transmission, and energy distribution such as retail natural gas transmission to cities and towns across the country.
Detailed explanation-3: -An example of a natural monopoly is tap water. It makes sense to have just one company providing a network of water pipes and sewers because there are very high capital costs involved in setting up a national network of pipes and sewage systems.