Question

Independent oil refineries go to the U.S. oil company. The U.S. oil company could be seen as a __________ because all smaller refineries send their oil to it. If the delivery wagons failed to do their job, it would directly affect __________. If one of the independent oil refineries stopped producing oil, the U.S. oil company would __________. A meat-industry company could __________ its profits by owning businesses that perform all functions at all levels of production.

a. Distributor; Oil prices; Suffer a loss
b. Monopoly; Oil production; Increase
c. Buyer; Competition; Gain
d. Seller; Market share; Decrease

Answer 1

The U.S. oil company is akin to a monopoly, a disruption in deliveries would affect oil production, and if an independent refinery ceased production, the monopoly's market control would absorb the impact while a meat-industry company could integrate vertically to boost profits.

Step-by-step explanation:

The U.S. oil company described in the scenario could be seen as a monopoly because it consolidates oil refining by buying out or driving competitors out of business, leading to controlled pricing and a dominant market position, similar to how John D. Rockefeller's Standard Oil operated. If the delivery wagons, presumably the independent truckers, failed to perform their duties, it would directly affect oil production, impacting supply and potentially market prices due to the reliance on these deliveries. Should one of the independent refineries cease oil production, the U.S. oil company would not see a significant impact since its monopoly allows for greater control over the market, and such a loss would be a small fraction of its total capacity. If a meat-industry company owned businesses at all levels of production, integrating vertically, it could increase its profits by reducing costs and taking control of the supply chain, similar to the concept of a trust that Rockefeller used to consolidate the oil industry.