Which of the following factors explains the difference in long-run profits earned by a monopolist and a perfectly competitive firm?
A)Monopolists experience economies of scale.
B)Perfectly competitive firms have high opportunity costs.
C)The demand for the monopolist's output is perfectly inelastic.
D)The demand for the monopolist's output is perfectly elastic.
E)There are no barriers to entry in perfect competition.

Question

Quizplus · Accepted Answer

In perfect competition, there are no barriers to entry, allowing new firms to enter the market and drive economic profits to zero in the long run. Monopolists, however, face barriers to entry, allowing them to maintain long-run profits.

Which of the Following Factors Explains the Difference in Long-Run