Question

Consider a transportation corporation named C.R. Evans, which has just completed the development of a new subway system in a medium-sized city in Western Canada. Currently, there are plenty of seats on the subway, and it is never crowded. Its capacity far exceeds the needs of the city. After just a few years of operation, the shareholders of C.R. Evans experienced incredible rates of return on their investment due to the profitability of the corporation. How can C.R. Evans continue to be a monopolist in the subway transportation industry?

A.	only if population growth leads to an overcrowding of the subway cars
B.	only if there are no new entrants to the market
C.	only if demand for transportation services decreases
D.	only if the firm decides to offer public shares in the stock exchange

Answer 1

Option B

When the entry of new entrants to market is avoided, then C.R.Evans continues to be the only player in the market and hence it can continue to be a monopolist in the market