In the long run, a profit-maximizing monopolist
A)earns zero economic profit.
B)produces the same amount as a perfectly competitive industry.
C)receives a higher price for his output than a perfectly competitive firm.
D)produces at the output level that minimizes his long-run average total cost.

Question

Quizplus · Accepted Answer

A monopolist has the ability to influence the market price of its product due to lack of competition, so it can set the price higher than a perfectly competitive industry. This allows the monopolist to earn a higher profit than a perfectly competitive firm in the long run. However, it is not necessary for the monopolist to earn a zero economic profit or produce at the output level that minimizes its long-run average total cost.

In the Long Run, a Profit-Maximizing Monopolist