Why does a monopoly arise?
A) because of diseconomies of scale
B) because entry to an industry is blocked
C) because of elastic demand
D) because firms are greedy

Question

Quizplus · Accepted Answer

A monopoly arises when entry to an industry is blocked, enabling the existing firm to become the sole producer of a particular good or service. This may be due to various barriers to entry, such as legal restrictions, patents, economies of scale, high fixed costs, or control over essential resources or distribution channels. Diseconomies of scale, greed, or elastic demand may be factors that affect a monopolist's behavior or performance, but they do not necessarily create a monopoly.

Why Does a Monopoly Arise