A firm cannot maintain above-normal profits over the long run
A)Without the existence of a cartel.
B)Unless barriers to entry exist.
C)Unless predatory pricing occurs.
D)Without retaliation occurring.

Question

Quizplus · Accepted Answer

Without barriers to entry, other firms will enter the market and compete away the above-normal profits. The existence of a cartel may lead to above-normal profits, but it violates antitrust laws and can be difficult to maintain due to the incentive for individual firms to cheat. Predatory pricing may lead to temporary above-normal profits but is not sustainable in the long run. Retaliation may discourage entry by potential competitors, but it is not a guarantee for maintaining above-normal profits over the long run.

A Firm Cannot Maintain Above-Normal Profits Over the Long Run