What factor(s) enable a monopoly to make an economic profit in the long run?
What will be an ideal response?
Monopolies can make an economic profit in the long run because of barriers to entry. Barriers to entry keep other firms from entering the industry and driving down the price and profits.
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If a monopoly firm reduced the price of its product, which of following must have been true?
a. MR > MC b. MR < MC c. MR > AR d. MC > AR
Suppose the Environmental Protection Agency issues pollution permits in order to limit the quantity of pollution. Under this policy, is the supply of pollution rights perfectly elastic or is it perfectly inelastic?
If price was set by the government at $4, there would be a price _____________, that would cause a ___________ of _______ units.
A. floor; surplus; 8
B. floor; surplus; 10
C. ceiling; shortage; 8
D. ceiling; shortage; 12
All firms in a perfect competition industry
A. produce identical products. B. lose money. C. produce differentiated products. D. are price makers.