Explain how a monopolist can earn supernormal profits in the long run?


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2011-02-06 19:05:20
2011-02-06 19:05:20

in the long run, they dont spend a penny. and they take everybody money, and then they spend it on girls, and then they spend it on ps3, and then they take the tax payers money. all happy yay.


Related Questions

A monopolist earns economic profit when the price charged is greater than their average total cost. To maximize profits, monopolies will produce at the output where marginal cost is equal to marginal revenue. To determine the price they will set, they choose the price on the demand curve that corresponds to this level of production.

Supernormal profits due to high barriers to entry. Profits in the long run are determined by the barriers to entry. If there is high barriers to entry, new firms cannot enter the industry easily and hence cannot competed with existing firms for profits. Existing firms would be able to enjoy supernormal profits. On the contrary, weak barriers to entry means that the long run profits would be competed away by new firms entering the industry, hence firms would earn normal profits. Oligopoly market is characterised by high barriers to entry, largely due to non-price competition such as branding, advertising, etc. High barriers could also be due to economies of scale and high fixed cost.

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(inelastic portion is when MR = negative figure) Yes , because the optimum point is when MR equals to MC and there is no hell a way when MC is negative. Other than this, when the price is at the upper proportion of monopoly demand curve, the price is always higher and the monopoly firm will earn supernormal profit. Any answer which is reasonable will be accept.

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yes, they dont work for free!

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visit to learn how to earn more. more profits with no websites, traffic, no selling, no products, and no inventory

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It means that you have the right to earn as much money as you wish. This also means there are no restrictions other than legal ones how you accomplish this.

Price under perfect competition is determined by the forces of demand and supply of the industry. The price once fixed up by the industry is taken up by all the firms and the firm can sell any number of units at hat price.=The firm may earn normal profits, super normal profits in the short run whereas it earns normal profits in the long run.=

Describes how the firm will earn revenue, generate profits, and produce a superior return on invested capital

because producer decisions are motivated by the attempt to earn profits

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Undistributed corporate profits are also called IENR i.e. Income earned but nor receieved. These are the profits that shareholders may earn but will not receieve in their salary. Even I just read about it somewhere so I am guessing it is something like the deductions that are made in your salary apart from income tax.. Basically you earn that money on paper but you don't receieve it. A better explanation is welcomed

Developers do not earn a salary. They risk their savings and other financing to earn profits, from which they could draw a regular salary amount of their own choosing.

Market research helps producers earn more profits.

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