The Economy of the US

Question 3 • EA Academy Civics 9

Which scenario best illustrates the dangers of a monopoly for consumers?

Answer

Jasmine is looking for a new sweater. She wants one that is a dusty blue to go with a new pair of blue jeans. She finds nice sweaters in three stores, but only one store has the shade of blue she wants.

Marcus needs a new pair of running shoes. He only likes one brand and one style of shoe in that brand. He is upset when he cannot find the shoe he wants in his size in any store in town or online.

Ana uses one brand of peanut butter because it is the brand her grandmother uses. She is shocked when she discovers that a company has bought that brand and is discontinuing it in favor of their own.

Lek has a rare medical condition. Company X has developed a pill that is an effective treatment. It is the only company that can make the medicine. The company charges an extremely high price for each pill.

Explanation

A monopoly exists when a single company controls the supply of a product and consumers have no competing seller to turn to. In D, Company X is the only maker of an effective medicine and charges an extremely high price, so patients may have to pay more because there is no competition. The other scenarios involve limited preferences, availability, or a discontinued brand, but do not show one seller controlling the market and exploiting that position.

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