Which of the following could be considered a monopoly?

• A. A single firm that is the exclusive provider of electricity in a city
• B. Several firms competing to sell smartphones in a market
• C. A farmer selling wheat in a perfectly competitive market
• D. Two companies sharing the market for bottled water

Answer: (A)

Verified step by step guidance

1. Step 1: Understand the definition of a monopoly. A monopoly exists when a single firm is the exclusive provider of a good or service in a market, with no close substitutes and significant barriers to entry for other firms.
2. Step 2: Analyze each option to see if it fits the monopoly criteria. For example, a single firm providing electricity in a city typically faces no direct competition and has control over the market supply, which aligns with the monopoly definition.
3. Step 3: Consider the option of several firms competing to sell smartphones. Since multiple firms are present and competing, this represents a competitive market rather than a monopoly.
4. Step 4: Evaluate the farmer selling wheat in a perfectly competitive market. This scenario involves many sellers offering identical products, so it is the opposite of a monopoly.
5. Step 5: Look at two companies sharing the market for bottled water. This is an example of an oligopoly or duopoly, not a monopoly, because the market is shared between a few firms rather than dominated by one.