Attempts: 0 1 Average: 0.5/1 4. Sources of market power Aa Aa Consider the marke

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Attempts: 0 1 Average: 0.5/1 4. Sources of market power Aa Aa Consider the market for radio stations. At the national level, the Federal Communications Commission (FCC) only licenses a certain number of radio and television stations in each geographic area. A monopolist, unlike a competitive firm, has some market power. It can raise its price, within limits, without the quantity demanded falling to zero. The main source of a monopolist's market power is barriers to entry-that is obstacles that make it difficult for competitors to enter the market. Which of the following best describes the source of the monopolist's market power in the preceding scenario? O Hard to duplicate resources O Economies of scale O Legal barriers to entry Grade It Now Save & Continue QNA 3.16 © 2004-2016 Aplia. All rights reserved. © 2013 Cengage Learning except as noted. All rights reserved. Continue without saving

Explanation / Answer

The Legal barriers to entry, where the Government uses its authority to restrict the numer of entrants in the Radio staions market thorugh limited licenses, ensures the monopolist a sufficent market power in this case.

The firms existing in this segment are limited to a certain number with the licenses issued, thus which does not effect in reduction of prices and profits.

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