The monopolist, unlike the perfectly competitive firm, can continue to earn an economic profit in the long run because of:
A) collusive agreements with competitors.
B) price leadership.
C) cartels.
D) extremely high barriers to entry.

Question

Quizplus · Accepted Answer

Monopolists are able to earn economic profit in the long run due to the presence of high barriers to entry, which prevent potential competitors from entering the market and driving down prices. Examples of such barriers include economies of scale, legal restrictions, and control over key resources or distribution channels. On the other hand, collusive agreements, price leadership, and cartels involve cooperation with competitors, which is not characteristic of a monopolist.

The Monopolist, Unlike the Perfectly Competitive Firm, Can Continue to Earn