CA Foundation Exam  >  CA Foundation Questions  >  Monopoly power refers to the firm’s ability t... Start Learning for Free
Monopoly power refers to the firm’s ability to: (a) Earn economic Profit (b) Restrict entry into the industry (c) Set prices above marginal cost (d) Possess economies of scale?
Most Upvoted Answer
Monopoly power refers to the firm’s ability to: (a) Earn economic Prof...
Monopoly power refers to the firm’s ability to:

Earn economic profit:
- Monopoly power allows a firm to earn economic profit by being the sole provider of a product or service in the market.
- With no competition, the firm can set prices higher than its costs, resulting in higher profit margins.

Restrict entry into the industry:
- Monopolistic firms have the ability to restrict or limit the entry of new firms into the industry.
- This can be achieved through various means such as high barriers to entry, control over essential resources, or strong brand recognition.
- By limiting competition, the firm can maintain its monopoly power and continue to earn economic profits.

Set prices above marginal cost:
- Monopolistic firms have the power to set prices above the marginal cost of production.
- Marginal cost refers to the additional cost incurred in producing one additional unit of output.
- By setting prices above marginal cost, the firm can maximize its profit since it can charge a higher price without facing competition.

Possess economies of scale:
- Monopoly power often arises when a firm possesses economies of scale.
- Economies of scale refer to the cost advantages that a firm enjoys as it increases its scale of production.
- With larger scale, the firm can spread its fixed costs over a larger output, resulting in lower average costs.
- This cost advantage makes it difficult for new firms to enter the market and compete effectively, giving the existing firm monopoly power.

Conclusion:
- Monopoly power allows a firm to earn economic profit, restrict entry into the industry, set prices above marginal cost, and possess economies of scale.
- These factors contribute to the firm's ability to maintain its dominant position in the market and enjoy higher profits.
Community Answer
Monopoly power refers to the firm’s ability to: (a) Earn economic Prof...
Option b restrict entry into the industry

Explore Courses for CA Foundation exam
Monopoly power refers to the firm’s ability to: (a) Earn economic Profit (b) Restrict entry into the industry (c) Set prices above marginal cost (d) Possess economies of scale?
Question Description
Monopoly power refers to the firm’s ability to: (a) Earn economic Profit (b) Restrict entry into the industry (c) Set prices above marginal cost (d) Possess economies of scale? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about Monopoly power refers to the firm’s ability to: (a) Earn economic Profit (b) Restrict entry into the industry (c) Set prices above marginal cost (d) Possess economies of scale? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Monopoly power refers to the firm’s ability to: (a) Earn economic Profit (b) Restrict entry into the industry (c) Set prices above marginal cost (d) Possess economies of scale?.
Solutions for Monopoly power refers to the firm’s ability to: (a) Earn economic Profit (b) Restrict entry into the industry (c) Set prices above marginal cost (d) Possess economies of scale? in English & in Hindi are available as part of our courses for CA Foundation. Download more important topics, notes, lectures and mock test series for CA Foundation Exam by signing up for free.
Here you can find the meaning of Monopoly power refers to the firm’s ability to: (a) Earn economic Profit (b) Restrict entry into the industry (c) Set prices above marginal cost (d) Possess economies of scale? defined & explained in the simplest way possible. Besides giving the explanation of Monopoly power refers to the firm’s ability to: (a) Earn economic Profit (b) Restrict entry into the industry (c) Set prices above marginal cost (d) Possess economies of scale?, a detailed solution for Monopoly power refers to the firm’s ability to: (a) Earn economic Profit (b) Restrict entry into the industry (c) Set prices above marginal cost (d) Possess economies of scale? has been provided alongside types of Monopoly power refers to the firm’s ability to: (a) Earn economic Profit (b) Restrict entry into the industry (c) Set prices above marginal cost (d) Possess economies of scale? theory, EduRev gives you an ample number of questions to practice Monopoly power refers to the firm’s ability to: (a) Earn economic Profit (b) Restrict entry into the industry (c) Set prices above marginal cost (d) Possess economies of scale? tests, examples and also practice CA Foundation tests.
Explore Courses for CA Foundation exam

Top Courses for CA Foundation

Explore Courses
Signup for Free!
Signup to see your scores go up within 7 days! Learn & Practice with 1000+ FREE Notes, Videos & Tests.
10M+ students study on EduRev