Future Business Leader Achievments (FBLA) Economics Practice Exam

Which of the following is most likely NOT a monopolist?

1. The only gas station in an isolated, desert town

2. A large soft-drink firm such as Coca-Cola

3. The local telephone company

4. A water company in your area

The correct answer is: A large soft-drink firm such as Coca-Cola

In economics, a monopolist is defined as a single seller or producer that dominates a market for a specific product or service, facing little to no competition. The scenario involving the large soft-drink firm, like Coca-Cola, is indicative of a competitive market rather than a pure monopoly. While Coca-Cola is a major player and has significant market power, it operates in an industry with numerous competitors that offer similar beverages. Consumers have various alternatives, such as Pepsi, Dr. Pepper, and many other regional and private label brands, which prevents Coca-Cola from holding a monopoly over soft drinks. In contrast, the other scenarios depict conditions more closely aligned with monopoly characteristics. Each of those options presents situations where there are limited or no competitors for essential services or products in their respective markets. The isolated gas station is the only provider in the area, the local telephone company often operates as a single service provider due to regulatory frameworks, and water companies typically manage the only supply of water in a region. These examples exemplify a lack of competition, making them more representative of monopolistic scenarios.