If a monopoly engages in rent seeking, i. its average total cost curve is lower than otherwise.
Ii. it might or might not make an economic profit depending on how many other competitors also are rent seeking.
Iii. it necessarily incurs an economic loss.
A)i only
B)ii only
C)iii only
D)i and ii
E)i and iii

Question

Quizplus · Accepted Answer

Rent-seeking behavior refers to the actions of a monopoly to secure and maintain its monopoly power by manipulating the market forces. This can lead to an increase in the firm's average total cost curve, resulting in economic losses. However, the extent of the losses depends on various factors, including the number of competitors that are also engaging in rent-seeking behavior. Therefore, it is possible for a monopoly engaging in rent-seeking behavior to make an economic profit or not depending on the level of competition. Hence, option ii only is the correct choice.

If a Monopoly Engages in Rent Seeking, I