An incumbent monopolist producing more output than necessary might be able to keep potential rivals from entering
A)by flooding the market with products below its marginal cost in the short run.
B)if learning by doing reduces marginal cost.
C)if the long-run marginal cost can be lowered below the potential entrant's short-run marginal cost.
D)All of the above.

Question

Quizplus · Accepted Answer

All the options describe strategies an incumbent monopolist might use to produce more output than necessary to deter potential rivals from entering the market. Flooding the market with products below marginal cost can make entry unprofitable for newcomers. Learning by doing can reduce the monopolist's marginal costs over time, making it harder for new entrants to compete. Similarly, if the monopolist can lower its long-run marginal cost below the short-run marginal cost of potential entrants, it can deter entry by making it unprofitable for them.

An Incumbent Monopolist Producing More Output Than Necessary Might Be