A monopolist can make an economic profit in the long run because of
A) the relatively elastic demand for its product.
B) the relatively inelastic demand for its product.
C) the firm's price setting behavior.
D) barriers to entry.
E) the fact that the firm produces where MR = MC.

Question

Quizplus · Accepted Answer

A monopolist can make an economic profit in the long run due to the presence of barriers to entry. These barriers prevent competitors from entering the market and taking away the monopolist's market share, allowing the monopolist to continue operating at a profit. In addition, a monopolist can also set prices higher than production costs due to the lack of substitutes for their product, leading to inelastic demand, which further increases the monopolist's profits.

A Monopolist Can Make an Economic Profit in the Long