Suppose That It Requires a Special License in Order to Operate

Suppose that it requires a special license in order to operate a firm in a certain type of industry.In addition,suppose that firms that hold such licenses are able to sell them for a high price.Which of the following statements is true?

A) The firms in this industry must all be franchised.
B) This is a typical monopolistically competitive market in which there are no economic profits in the long run.
C) The government that issued the original licenses will be willing to issue more.
D) There is free entry by new firms into this industry.
E) Most firms currently in the industry are earning economic profits.

Correct Answer:

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