Choose the correct answer: Aa Aa 6. Sources of market power Consider the market

Question

Choose the correct answer:

Aa Aa 6. Sources of market power Consider the market for radio stations. At the national level, the Federal Communications Commission (FCC) only licenses a certain number of radio and television stations in each geographic area. A monopolist, unlike a competitive firm, has some market power. It can raise its price, within limits, without the quantity demanded falling to zero. The main source of a monopolist's market power is barriers to entry-that is, obstacles that make it difficult for competitors to enter the market. Which of the following best describes the source of the monopolist's market power in the preceding scenario? O Legal barriers to entry O Hard to duplicate resources O Economies of scale Attempt ONA 3.14 2004-2013 Aplia, All rights reserved Grade It Now Save & Continue 2013 Cengage Learning except as noted. All rights reserved.

Explanation / Answer

A - Legal Barriers to Entry.

This is because the license is granted only to a few stations by the government, making it difficult for new business to enter due to legal issues.

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