Which of the following is likely to occur in a monopolized market?
A) a deadweight loss due to the barriers to entry
B) profits that tend towards zero in the long run
C) a marginal revenue that exceeds marginal cost
D) a price that exceeds marginal cost

Question

Quizplus · Accepted Answer

In a monopolized market, the lack of competition allows the monopolist to set prices higher than the marginal cost of production, resulting in a price that exceeds marginal cost. This leads to reduced consumer surplus and deadweight loss. Additionally, because there are barriers to entry, the monopolist can continue to earn economic profits in the long run, so profits do not tend towards zero. The marginal revenue may or may not exceed marginal cost, depending on the elasticity of demand.

Which of the Following Is Likely to Occur in a Monopolized