Which one of the following statements about a monopoly is false?

a) A monopoly must have some kind of government privilege or government-imposed barrier to maintain its monopoly.

b) A monopoly could make profits in the long run.

c) A monopoly could break even in the long run.

d) A monopoly status could be temporary.

• The correct answer is a) A monopoly must have some kind of government privilege or government-imposed barrier to maintain its monopoly.

A monopoly is one of the four main types of market structures. This type of market structure has only one seller in the market due to the high barriers to entry in the industry. These barriers to entry are diverse and they are not necessarily the result of having government privileges. Some examples of barriers to entry are capital requirements, cost advantages, control of resources, economies of scale, product differentiation, and pricing strategies. Additionally, there are legal barriers such as patents and copyrights that are a type of government tool to promote innovation. However, this is not always the case of all monopolies. In contrast, option b), c) and d) are situations that are possible and can occur in a monopolistic market.