Scenario 15-2
Consider a local, privately-owned electrical cooperative named Minny County Megawatts (MCM, LLC). MCM has just completed a natural-gas-burning electrical power plant in the Midwest. Currently, MCM can meet the electricity needs of all residents in the county. In fact, its capacity far exceeds the needs of the county. After just a few years of operation, the shareholders of MCM experienced incredible rates of return on their investment due to the profitability of the corporation.
-Refer to Scenario 15-2.MCM will continue to be a monopolist in the electricity industry only if
A) population growth leads to an increased demand for electricity.
B) there are no new entrants to the market.
C) the price of natural gas decreases.
D) All of the above are correct.

Question

Quizplus · Accepted Answer

MCM will continue to be a monopolist in the electricity industry only if there are no new entrants to the market. If new competitors enter the market, they will decrease MCM's market share and potentially drive down prices. Population growth and changes in the price of natural gas may affect the demand and cost of electricity, but they do not determine whether MCM will maintain its monopoly position.

Scenario 15-2 Consider a Local, Privately-Owned Electrical Cooperative Named Minny County Megawatts