In contrast with perfect competition,a monopolist:
A)produces more at a lower price.
B)produces where MR MC,and a perfectly competitively firm produces where P = MC.
C)may have economic profits in the long run.
D)earns zero economic profits in the long run.

Question

In contrast with perfect competition,a monopolist:
A)produces more at a lower price.
B)produces where MR > MC,and a perfectly competitively firm produces where P = MC.
C)may have economic profits in the long run.
D)earns zero economic profits in the long run.

Quizplus · Accepted Answer

Monopolist can have economic profits in the long run because they are the sole producer in the market and can set higher prices than the production cost, creating a price premium. This allows them to earn profits in the long run. In contrast, in perfect competition, firms will only earn zero economic profits in the long run due to the pressures of competition driving prices down to the cost of production.

In Contrast with Perfect Competition,a Monopolist