In the monopoly market structure, new firms
A)cannot profitably enter the industry, even in the long run
B)may freely enter and leave the industry in both the short run and the long run
C)may freely enter and leave the industry in the long run only
D)may freely enter and leave the industry in the short run only
E)have no incentive to enter the industry, even if economic profits are present

Question

Quizplus · Accepted Answer

In a monopoly market structure, there are significant barriers to entry, such as high startup costs and legal barriers. As a result, it is not profitable for new firms to enter the market, even in the long run. Existing firms have already established their dominance over the market and have significant control over pricing and output decisions. Therefore, new firms have no chance of entering and succeeding in the market.

In the Monopoly Market Structure, New Firms