Question

Balmia Ammunition Inc., a firm controlled and managed by the government of Balmia, is the only company that has the license to produce defense arms in the country. Which of the following industry competitive structures does this best illustrate?

a) Monopoly
b) Oligopoly
c) Perfect competition
d) Monopolistic competition

Answer 1

Balmia Ammunition Inc. being the sole company with the license to produce defense arms in the country represents a monopoly in the industry competitive structure.

Step-by-step explanation:

This scenario best illustrates a monopoly in the industry competitive structure. A monopoly occurs when there is only one company that has the license to produce a specific product or service in the market, and there are significant barriers to entry for other firms. In this case, Balmia Ammunition Inc. is the only company authorized to produce defense arms in the country, giving them exclusive control over the market.