Barriers to entry are one reason that a monopoly:
A)earns an economic profit in the long run.
B)produces at a point where P

Question

Barriers to entry are one reason that a monopoly:
A)earns an economic profit in the long run.
B)produces at a point where P < MC in the long run.
C)ensures that fixed costs are not relevant in the long run.
D)maximizes its profits by producing where P = MC.

Quizplus · Accepted Answer

Barriers to entry prevent potential competitors from entering the market and competing with the monopoly, allowing the monopoly to have control over prices and production levels. This in turn allows the monopoly to earn economic profit in the long run.

Barriers to Entry Are One Reason That a Monopoly