Which of the following firms best fits the definition of a monopoly?
A) General Motors
B) Exxon Mobil
C) Local electric utility
D) AT&T

Question

Quizplus · Accepted Answer

A local electric utility is a classic example of a natural monopoly. These firms have high fixed costs and it is not economically feasible for more than one firm to operate in a given geographical area. As a result, the utility has exclusive control over the provision of electricity in that area. General Motors, Exxon Mobil, and AT&T do not fit the definition of a monopoly, as there are other firms that compete with them in their respective industries.

Which of the Following Firms Best Fits the Definition of a Monopoly