Question

Monopoly - End of Chapter Problem 1. Each of the following firms possesses market power. • Merck, the producer of the cholesterol-lowering drug Zetia • WaterWorks, a provider of piped water • Chiquita, a supplier of bananas and owner of most banana plantations • The Walt Disney Company, the creators of Mickey Mouse Identify the source of each firm's market power. Network externalities Control of a scarce resource Increasing returns to scale Technological superiority Government-created barrier Answer Bank Disney Chiquita Merck WaterWorks

Answer 1

Merck which is the producer of the cholesterol lowering drug Zetia- this is an example of government-created barrier as this type of market power creates the barriers to entry. Waterworks is the provider of piped water. This source of market power is the increasing returns to scale as this involves the large fixed cost to start. The more water supplies to people, lower its average total cost it becomes. It gives the cost advantage to this over other companies Chiquita which is a supplier of bananas and owner the most bananas planation. This source of its market power is its control over a scarce resource. Walt Disney Company that is the creators of Mickey Mouse. - this is an example of government-created barrier as this type of market power creates the barriers to entry. Summary Network externalities Control of a scarpe Tesource Increasing returns to scale Technological superiority Government created barrier Chiquita Water works Merck Disney