Best Paints has market power and is currently enjoying economic profit. Which of the following is most critical for Best Paints to maintain to protect its profit in the long run?

Question

Quizplus · Accepted Answer

A barrier to entry is most critical for Best Paints to maintain market power and protect its economic profit in the long run. This will prevent potential competitors from entering the market and challenging Best Paints' dominant position, allowing it to continue setting prices and earning high profits. Underexpansion or overexpansion may impact short term revenue and market share, but a barrier to entry will have a more significant impact on long-term profitability. Greenwashing may impact brand reputation but does not necessarily protect economic profit.

Best Paints Has Market Power and Is Currently Enjoying Economic