If a monopoly is producing with a normal profit, then:

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A monopolist producing with a normal profit will be producing at the point where its marginal cost (MC) intersects with its marginal revenue (MR) curve. At this point, the monopolist will be charging a price that exceeds its marginal cost, but not by an amount that allows for economic profits. In the long run, however, this level of profit is insufficient to attract new entrants into the market, so the monopolist will continue to operate at this level. The long run average cost (LRAC) curve will be U-shaped, with a falling portion followed by a rising portion. The monopolist will be operating on the falling portion of the LRAC curve, where it is still experiencing economies of scale but has not yet reached its minimum efficient scale.

If a Monopoly Is Producing with a Normal Profit, Then