[amp_mcq option1=”Earning net profit in all possible situations” option2=”Lower output at a higher cost in a normal profit situation” option3=”Charging different prices from different categories of buyers of the same product” option4=”Attempting to stop entry of other firms in the market” correct=”option4″]<\/p>\n
The correct answer is D. Attempting to stop entry of other firms in the market.<\/p>\n
A monopoly is a market structure in which there is only one seller of a good or service. This means that the monopoly has a great deal of market power and can charge higher prices than would be possible in a competitive market. In addition, a monopoly may not produce as much output as would be produced in a competitive market, which can lead to higher prices and lower consumer surplus.<\/p>\n
One way that a monopoly can maintain its market power is by attempting to stop entry of other firms into the market. This can be done through a variety of means, such as lobbying the government to pass laws that make it difficult for new firms to enter the market, or by engaging in predatory pricing, which is when a firm lowers its prices below cost in order to drive its competitors out of business.<\/p>\n
Attempting to stop entry of other firms into the market is a social cost because it prevents consumers from benefiting from lower prices and more choice. In addition, it can lead to higher prices and lower output, which can harm the economy as a whole.<\/p>\n
The other options are not correct because they do not explain why a monopoly involves a social cost. Option A is incorrect because a monopoly does not always earn net profit. In fact, a monopoly may earn a loss if the costs of production are higher than the price that it can charge. Option B is incorrect because a monopoly may produce the same output at a lower cost than would be possible in a competitive market. Option C is incorrect because a monopoly may charge the same price to all buyers of the same product.<\/p>\n","protected":false},"excerpt":{"rendered":"
[amp_mcq option1=”Earning net profit in all possible situations” option2=”Lower output at a higher cost in a normal profit situation” option3=”Charging different prices from different categories of buyers of the same product” option4=”Attempting to stop entry of other firms in the market” correct=”option4″]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12],"tags":[],"class_list":["post-56541","post","type-post","status-publish","format-standard","hentry","category-economics","no-featured-image-padding"],"yoast_head":"\n