Chapter 64, Problem 5MCQ

To determine

To state: the reason which will make it easier for firms in the industry to maintain positive economic profit.

Answer to Problem 5MCQ

The correct option is B i.e., a small number of firms in the industry.s

Explanation of Solution

A small number of firms in an industry makes it easier for the industry to maintain positive economic profits. As they will produce up to a point where MR= MC. And, there will be not much competition. So, they can easily attain positive economic profits.

Economics Concept Introduction

Introduction:

An oligopoly is defined as a market structure in which a market or an industry is controlled by a small number of large producers or sellers. Oligopolies are often interdependent in their output and pricing policies. These are an outcome of the aspiration to maximize profits, usually resulting in collusion between companies.