What entices a second firm to enter a market that was previously a single price monopoly?

What will be an ideal response?


A firm will enter a market when the incumbent monopolist is earning positive profits in the short run and in the long run. This occurs when the price that the firm charges is higher than the ATC at the profit maximizing quantity.

Economics

You might also like to view...

Which of the following would be most likely to shift the consumption function downward?

a. a stock market crash b. a price level decrease c. increased corporate profits d. a stock market boom

Economics

Refer to the diagrams and assumptions. If all the workers who lose their jobs in the union sector because of a W n to W u union wage increase are reemployed in nonunion sector 2, output in that sector will:



These two graphs show two sectors of the labor market for a particular kind of
labor. Relevant product markets are competitive. The two labor demand curves are identical and initially the quantities of labor employed in the two sectors are L 1 and L 1 and the wage rate in each sector is W n

A.  decrease by F + G.
B.  increase by F + G.
C.  increase by E + F.
D.  increase by E.

Economics

Based on the figure below. Starting from long-run equilibrium at point C, a decrease in government spending that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at__ creating _____gap.

A. B; no output B. D; an expansionary C. B; recessionary D. D; a recessionary

Economics

Refer to the above figure. Which panel represents what happens in the foreign job market in the short-run when U.S. firms substitute labor outside of the U.S. for labor inside the U.S.?

A) Panel A B) Panel B C) Panel C D) Panel D

Economics