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(Solved): A monopoly, unlike a perfectly competitive firm, has some market power. Thus, it can raise its price ...



A monopoly, unlike a perfectly competitive firm, has some market power. Thus, it can raise its price, within limits, without quantity demanded falling to zero. The main way monopolies retain their market power is through barriers to entry, which prevent other companies from entering monopolized markets and competing for customers. Consider the market for radio stations. At the national level, the Federal Communications Commission (FCC) licenses only a certain number of radio and television stations in each geographic area.

Which of the following best explains the barriers to entry that exist in this scenario?

Economies of scale

Legal barriers

Exclusive ownership of a necessary resource



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