Question

A monopoly, unlike a perfectly competitive firm, has some market power. Thus, it can raise the price, within limits, without quantity demanded falling to zero. The main way it retains its market power is through barriers of entry--that is, other companies cannot enter the market to create competition in that particular industry.Which barrier to entry explains why a monopoly exists in each scenario.1. The Aluminum Company of America (Alcoa) formerly controlled all U.S. sources of bauxite, a key component in the production of aluminum. Given that Alcoa did not sell bauxite to any other companies, Alcoa was a monopolist in the U.S. aluminum industry from the late-nineteenth century until the 1940s.2. In the natural gas industry, low average total costs are obtained only through large-scale production. In other words, the initial cost of setting up all the necessary pipes and hoses makes it risky and, most likely, unprofitable for competitors to enter the market.3. In an imaginary country, there is only one federally licensed lottery agency in any state; that is, it is impossible for any private firm to start up a competitive lottery without a government license to do so.a. Exclusive ownership of a key resourceb. Government-created monopoliesc. Economies of scale

Answer 1

Answer:

Consider the following explanation

Explanation:

Because a large scale production reduces the average cost, it brings economies of scale. Hence for a public water company select economies of scale

For taxis the requirement of obtaining a licensing is a legal barrier created by the government. Hence select government created monopoly

In the last case the company controls a key resource so select exclusive control over a key resource.