Asked by Leslie Ann Romero on Sep 24, 2024
Verified
The main reason(s) monopolies can earn positive profits for a while is(are)
A) assets cannot quickly move in and out of the industry when demand fluctuates
B) an increase in demand does not lead to entry of firms to absorb the extra demand
C) both A&B
D) none of the above
Monopolies
Market situations in which a single company or entity has exclusive control over the supply of a particular good or service.
Positive Profits
Financial gain experienced by a business when the total revenue exceeds the total costs and expenses incurred in producing goods or services.
Demand Fluctuates
Demand fluctuates refers to the constant variations in consumer desire for products or services, which can be influenced by factors like season, price, and trends.
- Understand the factors contributing to profit generation and absence in both competitive and monopolistic market environments.
Verified Answer
IF
isidro figueroa1 day ago
Final Answer :
C
Explanation :
Monopolies can earn positive profits for a while because of the combination of factors A and B. Assets cannot easily move in and out of the industry, which reduces the threat of new entrants, and an increase in demand does not lead to the entry of new firms that could absorb the additional demand. This lack of competition allows monopolies to maintain higher prices and earn positive profits in the long run.
Learning Objectives
- Understand the factors contributing to profit generation and absence in both competitive and monopolistic market environments.