In which market structures is the firm able to earn long-run economic profits?
A) perfect competition and monopolistic competition
B) monopolistic competition and oligopoly
C) oligopoly and monopoly
D) monopolistic competition, oligopoly and monopoly

Question

Quizplus · Accepted Answer

In oligopoly and monopoly, the firm has some degree of market power and can restrict output to increase prices, which allows them to earn long-run economic profits. In perfect competition and monopolistic competition, there is intense competition and no barriers to entry, so firms are not able to earn long-run economic profits.

In Which Market Structures Is the Firm Able to Earn