If a monopolist with significant barriers to entry is making positive economic profit in the short run, what do we expect to happen as the market transitions to the long run? O The profit will increase since the monopolist has no competition, they can just raise the price to earn higher profits. It will decrease as positive economic profit signals new firms to enter the market, increasing the market supply, and lowering the prevailing price. It will increase, in the long run fırms will drop out the market increasing the monopolists dominance in the marketplace. The profit will stay the same, strong barriers to entry prevent new competition.
If a monopolist with significant barriers to entry is making positive economic profit in the short run, what do we expect to happen as the market transitions to the long run? O The profit will increase since the monopolist has no competition, they can just raise the price to earn higher profits. It will decrease as positive economic profit signals new firms to enter the market, increasing the market supply, and lowering the prevailing price. It will increase, in the long run fırms will drop out the market increasing the monopolists dominance in the marketplace. The profit will stay the same, strong barriers to entry prevent new competition.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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