Buying a Monopoly from the Existing Owner Does Not Ensure

question 70

Multiple Choice

Buying a monopoly from the existing owner does not ensure an economic profit because

• A) competition among buyers drives up the cost of buying the firm.
• B) profits equal zero in the long run anyway.
• C) of the deadweight loss triangle.
• D) the market for monopolies is a monopoly.

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Definitions:

Required Rate of Return

The minimum return an investor expects to earn on an investment, considering its risk level and alternative opportunities.

Margin

The difference between the selling price of a product or service and its cost, expressed as a percentage of the selling price.

Turnover

A measure of a company's sales or revenues relative to the average value of its assets, inventory, or employees.

Return on Investment

A measure of the financial gain or loss on an investment relative to the amount of money invested.