A monopolist, unlike a competitive firm, has some market power. It can raise its price, within limits, without the

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A monopolist, unlike a competitive firm, has some market power. It can raise its price, within limits, without the quantity demanded falling to zero The main way it retains its market power is through barriers to entry-that is, other companies cannot enter the market to create competition in that particular industry. Complete the following table by indicating which barrier to entry appropriately explains why a monopoly exists in each | Barriers to Entry Barriers to Entry Barriers to Entry Scenario Exclusive Ownership of a Key Resource Government Created Monopolies Economies of Scale Patents are granted to inventors of a product or process for a certain number of years. The reason for this is to encourage innovation in the economy. Without the existence of patents, it is argued, research and development for improved electronics is unlikely to take place since there's nothing preventing another firm from stealing the idea, copying the product, and producing it without incurring the

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Scenario # 1 is government-created monopolies. Patent once approved, will grant a firm the exclusive right on the innovation or the product for a period of time. Scenario # 2 is a case of a monopoly due to the economies of scale. New firms may find it difficult to enter when an existing and established firm is in the industry. Not only do they require a large number of investments to keep up but also have to compete with a price that they may not be able to afford. Scenario # 3 is a case of a monopoly due to exclusive ownership of key resource. Diamond is known to be a rare commodity. De Beers has access to most of the diamond mines and their distribution. Hence, the monopoly.

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A monopolist, unlike a competitive firm, has some market power

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	Barriers to Entry	Barriers to Entry	Barriers to Entry
Scenario	Exclusive Ownership of a Key Resource	Government Created Monopolies	Economies of Scale
Patents are granted to inventors of a product or process for a certain number of years. The reason for this is to encourage innovation in the economy. Without the existence of patents, it is argued, research and development for improved electronics is unlikely to take place since there's nothing preventing another firm from stealing the idea, copying the product, and producing it without incurring the development costs.
In the electricity industry, low average total costs are obtained only through large-scale production. In other words, the initial cost of setting up all the necessary wiring makes it risky and, most likely, unprofitable for competitors to enter the market.
Throughout much of the 20th century, many people viewed South Africa's De Beers Group as a monopoly because it controlled a large percentage of diamond production and sales.