Answer to Question #64066 in Economics of Enterprise for [e-mail]

Question

In the rural farming town of York Springs, Smith's was the only grocery store and Lehman's was the only animal feed mill. How would you describe these businesses

Answer 1

If in the rural farming town of York Springs, Smith's was the only grocery store and Lehman's was the only animal feed mill, then these businesses can be described as local monopolies, that's why they can set the higher prices in their town and provide lower than competitive quantity of the output.