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.

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
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Chapter1: Making Economics Decisions
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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.
O It will decrease as positive economic profit signals new firms to enter the market, increasing the
market supply, and lowering the prevailing price.
O It will increase, in the long run firms will drop out the market increasing the monopolists
dominance in the marketplace.
O The profit will stay the same, strong barriers to entry prevent new competition.
Transcribed Image Text: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. O It will decrease as positive economic profit signals new firms to enter the market, increasing the market supply, and lowering the prevailing price. O It will increase, in the long run firms will drop out the market increasing the monopolists dominance in the marketplace. O The profit will stay the same, strong barriers to entry prevent new competition.
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