It is possible to distinguish a monopoly from perfect competition by noting that only competitive firms can earn economic profits in the short run.

Question

Quizplus · Accepted Answer

Both monopolies and firms in perfect competition can earn economic profits in the short run. However, in the long run, firms in perfect competition will eventually see their profits reduced to zero due to the entry of new competitors driving down prices. Monopolies, on the other hand, can continue to earn economic profits in the long run due to barriers to entry preventing new competitors from entering the market.

It Is Possible to Distinguish a Monopoly from Perfect Competition