Which of the following explains why firms in competitive price-searcher and competitive price-taker markets will both have zero economic profits in the long run but a monopoly will not?
A) There is always more than one firm in competitive price-searcher and competitive price-taker markets.
B) Both competitive price-searcher and competitive price-taker markets are characterized by firms producing identical goods, but a monopoly is not.
C) In both competitive price-searcher and competitive price-taker markets, the barriers to entry are low; this is not true under a monopoly.
D) A monopoly firm has a downward-sloping demand curve; firms in the other types of markets do not.

Question

Quizplus · Accepted Answer

In competitive price-searcher and price-taker markets, low barriers to entry allow new firms to enter when profits are positive, driving profits to zero in the long run. Monopolies have high barriers to entry, preventing new firms from entering and allowing them to maintain economic profits.

Which of the Following Explains Why Firms in Competitive Price-Searcher