What is one reason firms might lobby to prevent entry into their market? A) The long run equilibrium might be characterized by P = MC = ATC. B) The long run equilibrium might be characterized by P = MC MC = ATC. D) The long run equilibrium might be characterized by P = MC ATC.

Question

What is one reason firms might lobby to prevent entry into their market?
A) The long run equilibrium might be characterized by P = MC = ATC.
B) The long run equilibrium might be characterized by P = MC < ATC.
C) The long run equilibrium might be characterized by P > MC = ATC.
D) The long run equilibrium might be characterized by P = MC > ATC.

Quizplus · Accepted Answer

If the long run equilibrium is characterized by P = MC > ATC, it means that firms in the market are making economic profit. Allowing new firms to enter the market would increase competition, driving down prices and reducing the profits of existing firms. Therefore, firms might lobby to prevent entry into their market to protect their profits.

What Is One Reason Firms Might Lobby to Prevent Entry