2. Barriers to entry guarantee that a firm will always earn positive economic pr

Question

2. Barriers to entry guarantee that a firm will always earn positive economic profit. cannot be maintained in the long run because other firms will always find a way to enter a profitable industry. are obstacles that make it impossible or unprofitable for new firms to enter a market in the long run. characterize both perfectly competitive and monopoly markets. c. d. Suppose MR-MC-$3 at an output level of 2,000 units. If a monopolist produces and sells 2,000 units, charging a price of $6 per unit and incurring average total cost of $5 per unit, the monopolist will earn profit equal to: a. $6,000. b. $4,000. c. $2,000. d. $1,000. 3.

Explanation / Answer

Ans)

2.
c. are obstacles that make it impossible or unprofitable for new firms to enter a market in the lonf run.
Barriers to entry are significant in case of a monopoly and an oligopoly markets and none for perfect competition and monopolistic competition.

3.
c. $2000
Profit=(P-ATC)*Q
=(6-5)*2000
=2000
So the profit is $2000

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