The principal difference between economic profits for a monopolist and for a competitive firm is that
A) monopoly profits create major problems of equity whereas competitive profits do not.
B) competitive profits exist only in the short run whereas monopoly profits may exist in the long run as well.
C) monopoly profits represent a transfer out of consumer surplus whereas competitive profits do not.
D) monopoly profits are considered a deadweight loss but competitive profits are not.

Question

Quizplus · Accepted Answer

In a competitive market, profits tend to zero in the long run due to entry of new firms, whereas a monopolist can sustain economic profits in the long run due to barriers to entry.

The Principal Difference Between Economic Profits for a Monopolist and for a Competitive