1. Sources of monopoly power A monopolist, unlike a competitive rm, has some market power. It can raise its price, within iimits, without the quantity demanded falling to zero. The main way it retains its market power is through barriers to entrythat is, other companies cannot enter the market to create competition in that particular ind ustry. Complete the following table by Indicating which barrier to entn.' appropriately explains why a monopoly exists in each scenario. Barriers to Entry Exclusive Government- Ownershlp of 3 Created Economies Scenario Key Resource Monopollls of Scale In order to own and operate a taxi, drivers are required to obtain a taxi medallion. O O Q The Aluminum Company of America (Alcoa) formerly controlled all us. sources of bauxite, a key component in the production of aluminum. Given that Aicoa did not sell bauxite to any other companies, Alcoa was a monopolist in the U.S. aluminum 0 O 0 industry from the late 19th century until the 19405. In the natural gas industry, low average total costs are obtained only through large-scale production. In other words, the initial cost of setting up all the necessary pipes and hoses makes it risky and, most likely, unprotable for O O O competitors to enter the market. 3. The components of marginal revenue Darnell's Fire Engines is the sole seller of fire engines in the fictional country of Pyrotania. Initially, Darnell produced five fire engines, but he has decided to increase production to six fire engines. The following graph shows the demand curve Darnell faces. As you can see, to sell the additional engine, Darnell must lower his price from $160,000 to $120,000 per fire engine. Note that while Darnell gains revenue from the additional engine he sells, he also loses revenue from the initial five engines because he sells them all at the lower price. Use the purple rectangle (diamond symbols) to shade the area representing the revenue lost from the initial five engines by selling at $120,000 rather than $160,000. Then use the green rectangle (triangle symbols) to shade the area representing the revenue gained from selling an additional engine at $120,000.200 180 Demand Revenue Lost 160 140 Revenue Gained 120 PRICE (Thousands of dollars per fire engine) 100 80 60 40 20 0 1 2 3 4 5 6 7 B 9 10 QUANTITY (Fire engines)Darnell increase production from 5 to 6 fire engines because the dominates in this scenario. True or should ell's Fire Engines were a competitive firm instead and $160,000 were the market price for an engine, increasing its production would n should not price at which he can sell engines. O True O FalseDarnell increase production from 5 to 6 fire engines because the dominates in this scenario. True or False: If Darnell's Fire Engines were a competitive firm instead and $160,0 output effect rket price for an engine, increasing its production would not affect the price at which he can sell engines. price effect True O False