A fundamental source of monopoly market power arises from
A)perfectly elastic demand.
B)perfectly inelastic demand.
C)barriers to entry.
D)availability of "free" natural resources, such as water or air.

Question

Quizplus · Accepted Answer

Barriers to entry can limit or prevent competition, giving a firm monopoly power. These barriers can include high start-up costs, government regulations, patents, and exclusive access to certain resources. Perfectly elastic demand (A) and perfectly inelastic demand (B) both lead to a lack of market power, as consumers can easily find substitutes or are willing to pay any price for the good, respectively. The availability of "free" natural resources (D) does not necessarily lead to monopoly power, as the resources may be available to multiple firms, and competition can still exist in the market.

A Fundamental Source of Monopoly Market Power Arises from