Author Question: In the long run, which of the following is not a problem for a monopolist earning economic profit? ... (Read 45 times)

evelyn o bentley · **on:** Jun 30, 2018

In the long run, which of the following is not a problem for a monopolist earning economic profit?
a. other firms have an incentive to create substitutes for the monopolist's product
b. technological change tends to break down barriers to entry
c. patents expire, licenses must be renewed, and new sources of essential resources may be discovered
d. government often decides to regulate monopolies
e. all profit will gradually be converted to consumer surplus

Question 2

U.S. manufacturers formed trusts in the late 1880s because
a. booms in the economy made trusts highly profitable and allowed them to expand
b. economies of scale allowed larger firms to prosper
c. the rapid growth of the railroads allowed firms to reach a wider market
d. technological breakthroughs increased capital use and optimal firm size
e. they wanted to avoid price wars during depressions