Why can a monopoly earn economic profits in the long run?
What will be an ideal response?
Because a monopoly experiences very strong barriers to entry, keeping potential competitors out of its market, it can earn economic profits in the long run. Barriers to entry may include economies of scale, financial and technological barriers to entry, sole ownership over a strategic resource, and even government laws and regulation.
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Along a downward-sloping money demand schedule, as the interest rate falls
A) the quantity of money demanded falls. B) the quantity of money demanded rises. C) real income rises. D) real income falls.
If price is determined as a multiple of costs, then a firm is using
A) cost plus pricing. B) product line extension pricing. C) peak-load pricing. D) marginal cost pricing.
After an increasing cost industry responds to an increase in demand, in the long run the equilibrium price will be ______ than before the demand increase
a. higher b. lower c. the same as d. impossible to predict
Pete throws leftover bread onto his front lawn because he enjoys watching the pigeons feeding. His neighbor John is not happy about the pigeons, since they leave a mess on his property. This is an example of a nice gesture causing a
a. negative externality b. public good c. positive externaility d. third-party benefit e. free-rider outcome