A monopoly, unlike a perfectly competitive firm, assumes some market power. He can increase his price, within certain limits, without the quantity demanded falling to zero. The main way to maintain your hold on the market is to create barriers to entry, i.e. other companies cannot enter the market to create competition in that particular industry.
Answer 1
C) The electricity company has economies of scale. This means that he can produce more at lower cost (as long as bad managerial inefficiency does not increase the cost). So another firm entering the market cannot increase its production and sell at a lower cost than the original firm, so the second firm will leave the market because no one is willing to buy from it at a higher price (provided the quality of service is the same). ). Therefore, the low cost of selling electricity and the high production (due to economies of scale) of the electricity company make it difficult for other companies to compete and become a barrier to entry.