Question

A barrier to entry is A. the situation when the government produces a good instead of relying on private firms to produce the good. B. a term used to explain why monopolies always make economic profits. C. a restriction on starting a business. D. a restriction on the profits that a monopoly can make.

Answer 1

B. A term used to explain why monopolies always make economic profits.

Step-by-step explanation:

The main characteristic of a monopolistic market is that, there are no firms in the market and only a single player, apart from that, there are barriers to entry, which means you cannot enter into that monopoly to start a competition. Moreover, monopolies enjoy good economic profits as there is no other competitor available to challenge them on their costs and prices of products charged. Lastly, another characteristic of monopoly is that the product the firm produces is unique and hence has no other competitor in the market.

Hence, this term is used to explain why monopolies always make profits.

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