During the Gilded Age, how did monopolies typically impact many small businesses?

• A. Monopolies encouraged small businesses to merge and form larger competitive firms.
• B. Monopolies had little effect on small businesses, allowing them to compete freely.
• C. Monopolies provided financial support to small businesses, helping them expand.
• D. Monopolies often drove small businesses out of the market by undercutting prices and controlling supply chains.

Answer: (D)

Verified step by step guidance

1. Understand the role of monopolies: A monopoly is a market structure where a single firm dominates the entire market, controlling prices and supply without competition.
2. Analyze the impact on small businesses: Since monopolies can set prices lower than what small businesses can afford to match, they often reduce the profitability of these smaller firms.
3. Consider supply chain control: Monopolies may control essential resources or distribution channels, making it difficult for small businesses to access inputs or reach customers.
4. Evaluate competitive responses: Small businesses typically cannot compete effectively on price or scale, leading many to exit the market rather than merge or expand.
5. Conclude the typical outcome: Therefore, monopolies usually drive small businesses out of the market by undercutting prices and controlling supply chains, rather than supporting or encouraging their growth.