Scenario 15-1
Consider a transportation corporation named C.R.Evans that has just completed the development of a new subway system in a medium-sized town in the Northwest.Currently,there are plenty of seats on the subway,and it is never crowded.Its capacity far exceeds the needs of the city.After just a few years of operation,the shareholders of C.R.Evans experienced incredible rates of return on their investment,due to the profitability of the corporation.
-Refer to Scenario 15-1.C.R.Evans will continue to be a monopolist in the subway transportation industry only if
A) population growth leads to an overcrowding of the subway cars.
B) there are no new entrants to the market.
C) demand for transportation services decreases.
D) All of the above are correct.

Question

Quizplus · Accepted Answer

A monopolist exists when there are no close substitutes available, and currently, C.R.Evans is the only subway system in the town. However, if new entrants were to come into the market, they could potentially offer lower prices or better services, leading to a decrease in C.R.Evans' market share. Therefore, C.R.Evans will continue to be a monopolist only if there are no new entrants to the market. Population growth or a decrease in demand may affect profitability, but they do not determine whether C.R.Evans will still be a monopolist or not.

Scenario 15-1 Consider a Transportation Corporation Named C.R.Evans That Has Just Completed