Because a monopolist is in the market
A)barriers to entry prevent the monopolist from earning an economic profit.
B)the monopoly firm will tend to earn higher economic profits than perfectly competitive firms.
C)the monopoly firm can increase profit by increasing price in the short run.
D)the monopoly firm will earn normal profits in the long run.

Question

Quizplus · Accepted Answer

A monopolist has market power, which means it can set prices higher than its marginal cost, leading to higher economic profits than perfectly competitive firms. However, in the long run, if there are no barriers to entry, new firms may enter the market and compete away the monopolist's profits. Therefore, the monopolist may earn normal profits in the long run if barriers to entry are low. However, this is not always the case, as some monopolists may maintain their market power through various means like intellectual property rights or economies of scale, allowing them to continue earning high economic profits.

Because a Monopolist Is in the Market