When a market has barriers to entry,
A) then in the long run it is possible for the firms to incur economic losses.
B) then in the long run the only possible outcome for the firms to make zero economic profit.
C) then in the long run it might be possible for the firms to make a positive economic profit.
D) oligopolies cannot be created.
E) the HHI almost always falls below 1,000.

Question

Quizplus · Accepted Answer

When a market has barriers to entry, it creates a situation of limited competition. This leads to the possibility of firms making a positive economic profit in the long run, as there are fewer competitors. However, economic losses are also possible in the long run if the firms are unable to adapt to changing market conditions. Therefore, option C is the best choice. Option A and B are incorrect, as they present extreme outcomes that do not accurately reflect the reality of the market. Option D is also incorrect, as there are cases where oligopolies can still be created despite barriers to entry. Option E is irrelevant to the question and is also incorrect.

When a Market Has Barriers to Entry