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Microeconomics

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Monopoly: Purple to Green

MICRO-FRWHFT

For a long time, Jerry's Beans was a monopolist in the market for purple beans. There were no competitors in the market for that particular type of bean. Purple beans can only grow on a particular island owned by Jerry.

Jerry (of Jerry's Beans fame) then heard a rumor that Sherry's Beans, a rival company in the bean market, was thinking about trying to produce their own line of purple beans. Sherry's currently doesn't sell purple beans but might be planning to in the future!​

But then Jerry realizes that his fears are silly. From the description above, which of the following reasons why a monopoly wouldn't fear competition apply here?

A

Jerry has exclusive control to an important input for the product.

B

Jerry has a patent or copyright.

C

There are a limited number of purple bean licenses available, and Jerry holds them all.

D

Purple beans are a natural monopoly.

E

Purple beans are part of a network economy.