A monopoly, unlike a perfectly competitive firm. assmes some market power It can

Question

A monopoly, unlike a perfectly competitive firm. assmes some market power It can rales its prince. limits, without the quantity demanded falling to zero The main way it retains its market power is through barriers to entry-that is. Other companies cannot enter the market to create competition m that particular industry Consider the market for a state-wide lottery. Suppose the government has licensed itself as the only entity allowed to sell tickets for this lottery It is impossible for any private firm to start up a competitive lottery without a government license to do so. Which of the following best explains the barriers to entry that exist kt this scenario?

Explanation / Answer

1. The correct answer is option C: Legal Barriers

The above given option is correct since licensing becomes a key issue in the field of operations. A business that runs with no proper license will be subject to legal actions and the barriers corresponding to Legal issues are called as Legal Barriers.

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