In the long run,a monopoly's
A)economic profits are zero
B)economic profits are negative
C)economic profits are positive
D)demand is perfectly inelastic

Question

In the long run,a monopoly's
A)​economic profits are zero
B)economic profits are negative
C)economic profits are positive
D)​demand is perfectly inelastic

Quizplus · Accepted Answer

In the long run, a monopoly's economic profits are zero due to the entry of potential competitors. As the barriers to entry in the market decrease or eliminated, new firms will begin entering the market which will take away market share and reduce the monopoly's market power. This will eventually drive down profits towards a level of zero. Therefore, economic profits become zero over the long run.

In the Long Run,a Monopoly's