Question 1
Which type of barrier to entry allowed the electric company to maintain a monopoly over the production of electricity?
◦ a patent
◦ economies of scale
◦ diseconomies of scale
◦ ownership of a scarce factor of production
Question 2
Refer to the information provided in Figure 13.8 below to answer the question that follows.
Refer to Figure 13.8. The only firm producing electricity has the long-run average total cost curve shown. The total amount of demand for kilowatts is 100,000 per hour. It makes economic sense for this firm to be the only producer of electricity because this firm
◦ must be realizing economies of scale in producing electricity.
◦ must have a patent on the production process necessary to produce electricity.
◦ must have control over a scarce factor of production.
◦ must have a government franchise to produce electricity.
Ugonachomma display figure, Igbo, Nigeria.
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