Question

You can find the mines for tanzanite (a blue-purple gemstone) only in Tanzania, but they are owned by the local government. Given that no one is allowed into the mines without government permission, the market structure for tanzanite highly resembles that of a monopoly. At the national level, the Federal Communications Commission licenses only a certain number of radio and television stations in each geographic area. In the electricity industry, low average total costs are obtained only through large-scale production. In other words, the initial cost of setting up all the necessary wiring makes it risky and, most likely, unprofitable for competitors to enter the market.

Answer 1

a) The mines are an example of exclusive ownership of the resources in the market, the firm operating there will own the resources by government permission.

b) This is an example of the government created monopolies.

c) This is a natural monopoly that is created by economies of scale in the market.