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Author Question: Because of rent seeking, a monopoly may end up earning a normal profit. Is the previous statement ... (Read 48 times)

corkyiscool3328

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on: Jun 29, 2018
Because of rent seeking, a monopoly may end up earning a normal profit. Is the previous statement correct or incorrect? Why?
 
  What will be an ideal response?

Question 2

________ is the difference between the willingness to pay and the price paid for a good.
 
  A) Producer surplus
  B) Consumer surplus
  C) Seller's profit
  D) Revenue


xMRAZ

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Reply #1 on: Jun 29, 2018
Answer to Question 1

The statement is correct. Competition among rent seekers might cause the successful person striving to create a monopoly to pay so much in order to create the monopoly that, when taking into account the cost of creating the monopoly, the person earns only a normal profit.

Answer to Question 2

B


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