FSOT Full Test Bank

Answer: C - Monopolistic activities are not legal; the other three are competitive strategies. A company with a monopoly is able to manipulate the market in such a way that it drives other companies out of business. Monopolies are illegal because they are bad for competition and bad for consumers.

Some industries, such as rail, electricy generation and water processing have extremely high infrastructure cost, inelastic demand and large efficiencies of scale, thus causing high barriers to entry. These industries are frequently run as regulated regional monopolies because of the inefficiency of competition and to prevent the monopolistic company from taking advantage of the consumer.