Scenario 15-2
Consider a local, privately-owned electrical cooperative named Poweshiek Power Company (PPCo). PPCo has just completed a clean-coal-burning electrical power plant in Iowa. Currently, PPCo can meet the electricity needs of all residents in the county. In fact, its capacity far exceeds the needs of the county. After just a few years of operation, the shareholders of PPCo experienced incredibly high rates of return on their investment due to the profitability of the corporation.
-Refer to Scenario 15-2. PPCo will continue to be a monopolist in the electricity industry only if
A)population growth leads to an increased demand for electricity.
B)there are no new entrants to the market.
C)the price of natural gas decreases.
D)All of the above are correct.

Question

Quizplus · Accepted Answer

PPCo will continue to be a monopolist in the electricity industry only if there are no new entrants to the market. If other competitors enter the market, PPCo's market power will decrease, and they will no longer be a monopolist. Population growth and fluctuations in natural gas prices may affect the electricity market, but they do not necessarily determine whether PPCo will continue to be a monopolist or not.

Scenario 15-2 Consider a Local, Privately-Owned Electrical Cooperative Named Poweshiek Power Company