Which of the following qualities would ideally suit a monopolistic firm with regard to barriers to entry?

• A. No barriers to entry, resulting in perfect competition
• B. Barriers to entry that fluctuate frequently, allowing occasional entry
• C. High barriers to entry that prevent other firms from entering the market
• D. Low barriers to entry that allow many competitors to enter easily

Answer: (C)

Verified step by step guidance

1. Understand the concept of barriers to entry: These are obstacles that make it difficult for new firms to enter a market. High barriers protect existing firms from new competition.
2. Recall the characteristics of a monopolistic market: A monopolistic firm typically has significant market power, which is often sustained by high barriers to entry preventing other firms from entering.
3. Analyze the options given: No barriers lead to perfect competition, which contradicts monopoly; fluctuating barriers allow occasional entry, reducing monopoly power; low barriers allow many competitors, also reducing monopoly power.
4. Identify that the ideal condition for a monopolistic firm is to have high barriers to entry, which maintain its market dominance and prevent new competitors from entering.
5. Conclude that the correct choice is 'High barriers to entry that prevent other firms from entering the market' because it aligns with the fundamental nature of monopoly markets.