Why is the De Beers diamond monopoly a classic example of a monopoly?

a. It is government-created.

b. It arises from the ownership of a key resource.

c. It results in very little advertising of the product that the monopolist produces.

d. It was broken up by the government a long time ago.

The correct answer is B.

Dee Beers is an example of a monopoly because it results from a critical resource's ownership. Dee Beers is based on a natural resource. Usually, managing a natural resource is essential for the final good generation because it acts as a source of monopoly power. The ownership of a single resource provides a company owner with the potential to increase a good's market price over marginal costs while retaining customers. During the 20th century, Dee Beers diamond had substantial market power in the global market, while still selling diamonds at high prices. Keeping customers means that a company is not losing its customers to its competitors.