Which of the following firms would likely pose the least competitive threat in a market characterized by monopoly?

• A. A firm facing significant barriers to entry
• B. A firm protected by government-granted patents
• C. A firm with no market power and many close substitutes
• D. A firm with exclusive control over a key resource

Answer: (C)

Verified step by step guidance

1. Step 1: Understand the characteristics of a monopoly market, where a single firm dominates the market with significant barriers to entry preventing other firms from competing effectively.
2. Step 2: Analyze each option in terms of its ability to compete with the monopolist. Firms facing significant barriers to entry or protected by patents typically cannot enter or compete easily, so they pose little threat.
3. Step 3: Consider a firm with exclusive control over a key resource, which can limit the monopolist's access to inputs, potentially posing a competitive threat.
4. Step 4: Evaluate a firm with no market power and many close substitutes. Such a firm operates in a highly competitive environment and lacks the ability to influence market prices or challenge a monopolist effectively.
5. Step 5: Conclude that the firm with no market power and many close substitutes would pose the least competitive threat to a monopolist because it cannot influence the market or challenge the monopoly's dominance.