A firm typically achieves its position as a monopolist as a result of
A) a small market and a constant average cost.
B) a downward sloping demand for the product.
C) barriers to entry.
D) the absence of long-run profits in an industry.

Question

Quizplus · Accepted Answer

A firm typically achieves its position as a monopolist due to the presence of barriers to entry, which prevent other firms from entering the market and competing against the monopolist. These barriers can include legal protection through patents or licenses, control over essential resources, economies of scale or network effects, and strategic pricing or advertising practices. The absence of long-run profits in an industry (D) would discourage entry, but it does not necessarily result in a monopolist. A small market and constant average cost (A) would not provide enough market power to sustain a monopolist. A downward sloping demand for the product (B) is a necessary condition for a firm to have market power, but it does not explain how the firm became a monopolist in the first place.

A Firm Typically Achieves Its Position as a Monopolist as a Result