Monopoly results because of:
Select one: a. barriers to entry into the industry. b. greed by the seller. c. lack of interest by potential competitors. d. inadequate regulation by government. e. all of the above.
The correct answer and explanation is:
The correct answer is a. barriers to entry into the industry.
Monopoly arises when a single firm dominates a market with no close substitutes for its product or service. This market structure is typically the result of significant barriers to entry, which prevent other firms from entering the market and competing. Barriers to entry are factors that make it difficult or impossible for new competitors to establish themselves within an industry. These can include high startup costs, government regulations, control over critical resources, or technological advantages that existing firms have over potential entrants. When these barriers exist, the monopolist can control prices and supply without the threat of competition.
Greed by the seller (option b) and lack of interest by potential competitors (option c) may contribute to the persistence of monopolies, but they are not the primary cause. In fact, the monopolist’s greed is often a result of their market power, which they have obtained through barriers to entry. If other firms could enter the market easily, they would likely offer alternatives, reducing the monopolist’s control over pricing and supply.
Inadequate regulation by government (option d) can allow monopolies to form or persist, but it is not the direct cause. Effective regulation can help prevent monopolistic behavior by enforcing antitrust laws and ensuring that market entry remains possible.
In conclusion, monopolies are most often a result of barriers to entry, which allow a single firm to dominate the market and prevent competition. These barriers can take many forms, but their presence creates an environment where the monopolist can exercise significant control over the industry.