If the demand for a good increases in a monopoly market,price will rise and firms will enter the industry in the long run

Question

Quizplus · Accepted Answer

In a monopoly market, there is only one firm that controls the supply of the good. Therefore, if the demand for the good increases, the monopoly firm can increase the price to maximize profits without the fear of competition entering the market. There is no incentive for new firms to enter the industry in the long run as the monopoly firm has a strong hold on the market.

If the Demand for a Good Increases in a Monopoly