Question 48

A new rare jewel is found, and only one mine in the world has it.

This scenario clearly illustrates a monopoly created by a single-owned resource, as the rare jewel is exclusively available from one specific mine, giving that owner complete control over the supply.

A) An author copyrights a new book.

While this option involves the exclusive rights granted to the author, it does not represent a monopoly in the traditional sense. Multiple authors can create new works, and the market for books is competitive, meaning other authors can publish similar works.

B) A bridge is so infrequently used that it is rarely congested, and therefore there is a large fixed cost of building the bridge but a negligible marginal cost of additional users.

This scenario describes a situation with high fixed costs but does not indicate a monopoly. The bridge could be used by anyone, and multiple bridges could exist in the market, allowing for competition in transportation.

C) A software company creates and copyrights the code for a new piece of software.

Although copyright grants exclusive rights, this does not necessarily create a monopoly. Other companies can create competing software, thus maintaining a competitive environment in the software market.

D) A new rare jewel is found, and only one mine in the world has it.

This option exemplifies a monopoly, as it indicates that the resource (the rare jewel) is exclusively owned and can only be sourced from one location, allowing the owner to control pricing and availability.

Conclusion

The scenario involving the rare jewel is definitively the correct answer as it highlights a true monopoly situation where one entity controls the entire supply of a unique resource. In contrast, the other options describe competitive environments or exclusive rights that do not equate to monopolies.