Local electric or gas utility companies mostly operate in which market structure?

• A. Oligopoly
• B. Monopoly
• C. Perfect competition
• D. Monopolistic competition

Answer: (B)

Verified step by step guidance

1. Understand the characteristics of different market structures: Monopoly, Oligopoly, Perfect Competition, and Monopolistic Competition.
2. Recall that a monopoly is a market structure where a single firm is the sole provider of a good or service, often due to high barriers to entry or government regulation.
3. Recognize that local electric or gas utility companies typically have exclusive control over their service area, meaning no close substitutes or competitors exist in that region.
4. Identify that this exclusivity and lack of competition align with the definition of a monopoly rather than oligopoly or other market structures.
5. Conclude that local electric or gas utility companies mostly operate in a monopoly market structure because they are the sole providers in their local markets.