Multiple Choice QuestionWhich of the following explains why a pure monopolist is able to maintain an economic profit in the long run?Multiple choice question.There are no new entrants to increase supply, drive up price, and eliminate profit.There are no new entrants to decrease supply, drive up price, and eliminate profit.There are no new entrants to increase supply, drive down price, and eliminate profit.There are no new entrants to decrease supply, drive down price, and eliminate profit.
Question
Multiple Choice QuestionWhich of the following explains why a pure monopolist is able to maintain an economic profit in the long run?Multiple choice question.There are no new entrants to increase supply, drive up price, and eliminate profit.There are no new entrants to decrease supply, drive up price, and eliminate profit.There are no new entrants to increase supply, drive down price, and eliminate profit.There are no new entrants to decrease supply, drive down price, and eliminate profit.
Solution
The correct answer is: "There are no new entrants to increase supply, drive down price, and eliminate profit."
Here's why:
-
A pure monopolist is the only supplier in the market. This means there are no new entrants to increase the supply of the product or service.
-
If there were new entrants, they would increase the supply of the product or service. According to the law of supply and demand, an increase in supply, assuming demand remains constant, leads to a decrease in price.
-
A decrease in price reduces the monopolist's revenue and, therefore, its profit.
-
However, because there are no new entrants in a pure monopoly, the monopolist can maintain its price and, therefore, its economic profit in the long run.
Similar Questions
Multiple Choice QuestionA(n) Blank______ is able to maintain an economic profit in the long run because there are no new entrants to increase supply, drive down price, and eliminate economic profit.Multiple choice question.oligopolistic firmmonopolistically competitive firmperfectly competitive firmmonopoly
Multiple Choice QuestionIn long-run equilibrium, monopolistically competitive firms will show a(n) Blank______.Multiple choice question.above-normal profitnormal profitincreasing lossbelow-normal profit
Multiple Choice QuestionIf a monopolistically competitive firm is producing where its marginal revenue is less than its marginal cost, then the firmMultiple choice question.is maximizing profits.should produce more output to increase profits.should shut down in the short run.should produce less output to increase profits or reduce losses.should shut down in the long run.
Which of the following is true about a monopolistically competitive firm?Group of answer choicesIt can earn an economic profit in the short run, but not the long run.It can earn an economic profit in the short run and the long run.It can earn an economic profit in the long run, but not the short run.It cannot earn a economic profit in either the short or long run.
Fill in the Blank QuestionFill in the blank question.The monopolist seeks maximum profit, not maximum unit profit.
Upgrade your grade with Knowee
Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.