Suppose that your firm has spent several decades establishing a well-known brand name through advertising.If other firms are prevented from entering your industry because of high advertising expense, your monopoly would result from:
A) sunk costs.
B) location.
C) economies of scale.
D) government restrictions.

Question

Quizplus · Accepted Answer

Sunk costs are costs that have already been incurred and cannot be recovered. In this case, the high advertising expense that other firms would need to incur to establish their own brand name is a sunk cost. This would prevent other firms from entering the industry and competing with your firm, resulting in a monopoly.

Suppose That Your Firm Has Spent Several Decades Establishing a Well-Known