Which of the following accurately describes a major difference between a monopolist and firms in perfectly competitive markets?
A) The monopolist maximizes profit; firms in perfectly competitive markets maximize sales.
B) The monopolist may earn long-run economic profit; firms in perfectly competitive markets cannot.
C) The monopolist is a price taker; firms in other markets are price searchers.
D) The monopolist may earn short-run profit; firms in perfectly competitive markets cannot.

Question

Quizplus · Accepted Answer

In perfectly competitive markets, firms cannot earn long-run economic profit as there are no barriers to entry, and new firms can enter the market and drive down prices. In contrast, a monopolist can earn long-run economic profit as there are substantial barriers to entry that prevent new firms from entering the market and competing. Therefore, a major difference between a monopolist and firms in perfectly competitive markets is that monopolists can earn long-run economic profit, while firms in perfectly competitive markets cannot.

Which of the Following Accurately Describes a Major Difference Between