When Barriers to Entry Are High, a Monopolist (Or Cartel)

question 254

Multiple Choice

When barriers to entry are high, a monopolist (or cartel) will often be able to increase their profits by

• A) expanding their output so they can increase their price.
• B) reducing their output so they can raise their price.
• C) expanding their output so they can lower their price.
• D) reducing their output so they can lower their price.

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Definitions:

Profits Maximization

The process or strategy of adjusting operations, costs, and pricing to achieve the highest possible profit from business activities.

Iron Law of Responsibility

A principle suggesting that long-term success of organizations is dependent on their acknowledgment and assumption of responsibilities towards society.

Society

A group of individuals who live together in a community or geographic area, sharing common cultures, traditions, and often functioning under a set of shared norms and laws.

Social Responsibility

Refers to the obligation of individuals and organizations to act in ways that benefit society at large, beyond their own interests or profiteering.