Asked by ashish adhikari on May 14, 2024
Verified
Large barriers to entry are one reason that a monopoly:
A) earns an economic profit in the long run.
B) produces at the minimum average total cost in the long run.
C) produces with no fixed costs in the long run.
D) maximizes its profits by producing where P = MC.
Barriers to Entry
Barriers that make it difficult for new entrants to join a market due to financial, legal, or procedural hurdles.
Economic Profit
The distinction in totality between incomes and costs, inclusive of both transparent and concealed expenses.
Long Run
A period in economics where all factors of production and costs are variable, allowing for full industry adjustment.
- Gain insight into how economies of scale and obstacles to entry contribute to the establishment and perpetuation of monopolistic markets.
Verified Answer
DM
Daphne MichaelMay 20, 2024
Final Answer :
A
Explanation :
Large barriers to entry prevent other firms from entering the market and competing with the monopoly. This allows the monopoly to continue earning an economic profit in the long run, as there are no other firms to drive down prices and lower its profits.
Learning Objectives
- Gain insight into how economies of scale and obstacles to entry contribute to the establishment and perpetuation of monopolistic markets.