Which is the best example of a monopolist?

Which is the best example of a monopolist?

• A. Microsoft Windows
• B. A local bakery
• C. American Airlines
• D. A fast-food chain with multiple rivals

Answer: (C)

A monopolist is a single seller in a market with no close substitutes, and with barriers that make it hard for new firms to enter. American Airlines best fits this idea because, on many routes, the combination of high fixed costs, regulatory constraints, and limited landing slots can give one airline substantial market power, effectively making it the sole or dominant provider in that market segment. That kind of route-specific or market-segment monopoly power is what distinguishes a monopolist from firms in more competitive settings. The other options don’t fit as well. Microsoft Windows faces competition from other operating systems, so it isn’t the sole seller of a product with no close substitutes. A local bakery operates in a market with many nearby competitors and alternatives for customers. A fast-food chain with multiple rivals is explicitly part of a competitive industry.

A monopolist is a single seller in a market with no close substitutes, and with barriers that make it hard for new firms to enter. American Airlines best fits this idea because, on many routes, the combination of high fixed costs, regulatory constraints, and limited landing slots can give one airline substantial market power, effectively making it the sole or dominant provider in that market segment. That kind of route-specific or market-segment monopoly power is what distinguishes a monopolist from firms in more competitive settings.

The other options don’t fit as well. Microsoft Windows faces competition from other operating systems, so it isn’t the sole seller of a product with no close substitutes. A local bakery operates in a market with many nearby competitors and alternatives for customers. A fast-food chain with multiple rivals is explicitly part of a competitive industry.