{"id":211659,"date":"2025-05-05T00:19:36","date_gmt":"2025-05-05T00:19:36","guid":{"rendered":"https:\/\/learnexams.com\/blog\/?p=211659"},"modified":"2025-05-05T00:19:39","modified_gmt":"2025-05-05T00:19:39","slug":"one-major-barrier-to-entry-under-pure-monopoly-arises-from","status":"publish","type":"post","link":"https:\/\/www.learnexams.com\/blog\/2025\/05\/05\/one-major-barrier-to-entry-under-pure-monopoly-arises-from\/","title":{"rendered":"One Major Barrier To Entry Under Pure Monopoly Arises From"},"content":{"rendered":"\n<p>One Major Barrier To Entry Under Pure Monopoly Arises From <\/p>\n\n\n\n<p>A. The Price Taking Ability Of The Firm. Ownership Of Essential Resources. O The Availability Of Close Substitutes For A Product. O Diseconomies Of Scale.<\/p>\n\n\n\n<p>The Entry Of New Firms Into A Competitive Market Will O Decrease Market Supply And Decrease Market Price. O Decrease Market Supply And Increase<\/p>\n\n\n\n<p><strong><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-ast-global-color-6-color\">The Correct Answer and Explanation is:<\/mark><\/strong><\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Question 1: One Major Barrier to Entry Under Pure Monopoly Arises From:<\/h3>\n\n\n\n<p><strong>Correct Answer: Ownership of Essential Resources.<\/strong><\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Explanation:<\/h3>\n\n\n\n<p>In a <strong>pure monopoly<\/strong>, a single firm dominates the entire market for a product or service, and one of the key barriers to entry that maintains this dominance is the <strong>ownership of essential resources<\/strong>. This means the monopolist controls a critical input or resource required to produce the good or service, and other firms cannot gain access to it.<\/p>\n\n\n\n<p>For example, if a company owns the only diamond mine in a region, it effectively controls the entire supply of diamonds in that area, making it impossible for competitors to enter the market. This exclusive access to a necessary resource acts as a <strong>barrier to entry<\/strong>, deterring or outright preventing new firms from producing the same good.<\/p>\n\n\n\n<p>Let\u2019s look at the other choices:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>The Price Taking Ability of the Firm<\/strong> is a characteristic of <strong>perfect competition<\/strong>, not a monopoly. In a monopoly, the firm is a <strong>price maker<\/strong>, meaning it can set the price of the product without concern for competition.<\/li>\n\n\n\n<li><strong>The Availability of Close Substitutes<\/strong> actually reduces monopoly power. If there are close substitutes, consumers can switch products, limiting the monopolist\u2019s pricing power.<\/li>\n\n\n\n<li><strong>Diseconomies of Scale<\/strong> refer to a rise in per-unit costs as a firm grows too large, which actually discourages monopolistic behavior and is <strong>not<\/strong> a barrier to entry.<\/li>\n<\/ul>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<h3 class=\"wp-block-heading\">Question 2: The Entry of New Firms into a Competitive Market Will:<\/h3>\n\n\n\n<p><strong>Correct Answer: Increase Market Supply and Decrease Market Price.<\/strong><\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Explanation:<\/h3>\n\n\n\n<p>In a <strong>competitive market<\/strong>, many firms sell similar or identical products. When <strong>new firms enter<\/strong> the market, the overall <strong>market supply increases<\/strong> because more products are available. According to the <strong>law of supply and demand<\/strong>, if supply increases while demand remains constant, <strong>prices will fall<\/strong>.<\/p>\n\n\n\n<p>This price decrease continues until economic profits are eliminated, leading to a long-run equilibrium. Hence, entry reduces profits and drives the price down closer to the <strong>marginal cost<\/strong>, ensuring efficient resource allocation. This mechanism is fundamental to how competitive markets regulate themselves.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>One Major Barrier To Entry Under Pure Monopoly Arises From A. The Price Taking Ability Of The Firm. Ownership Of Essential Resources. O The Availability Of Close Substitutes For A Product. O Diseconomies Of Scale. The Entry Of New Firms Into A Competitive Market Will O Decrease Market Supply And Decrease Market Price. O Decrease [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[25],"tags":[],"class_list":["post-211659","post","type-post","status-publish","format-standard","hentry","category-exams-certification"],"_links":{"self":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/211659","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/comments?post=211659"}],"version-history":[{"count":0,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/211659\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/media?parent=211659"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/categories?post=211659"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/tags?post=211659"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}