A monopolist is always earning economic profits but a perfectly competitive firm is not.

Question

Quizplus · Accepted Answer

A perfectly competitive firm will not be able to earn economic profits in the long run due to the presence of free entry and exit of firms in the market. On the other hand, a monopolist can earn economic profits in the long run due to its ability to restrict output and charge higher prices. However, a monopolist may not always earn economic profits as their costs may increase or demand for their product may decrease.

A Monopolist Is Always Earning Economic Profits but a Perfectly