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Explain how a monopolist can earn supernormal profits in the long run?
Alus
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.
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∙ 13y ago
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When can monopolist earn an economic profit?
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.
Types of profits in the long run in oligopoly?
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.
A monopolist will not always produce on the inelastic portion of its demand curve?
(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.
Which statements is true about profits in a monopolistically competitive market?
many firms will earn profits in the short term, but they must constantly innovate and compete to earn profits in the long term
Can a monopoly earn economic profits in the long run?
Yes
When can monopolist earn an economic profit?
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.
Types of profits in the long run in oligopoly?
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.
How do credit card companies earn profits?
Credit card companies earn profits by charging interest.
A monopolist will not always produce on the inelastic portion of its demand curve?
(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.
Which statements is true about profits in a monopolistically competitive market?
many firms will earn profits in the short term, but they must constantly innovate and compete to earn profits in the long term
Why companies undersubscribed shares?
to earn profits
Merchants who took risks to earn high profits?
Entrepreneurs were merchants who took risks in the hope of high profits.
Does dentist earn profits?
yes, they dont work for free!
Can a monopoly earn economic profits in the long run?
Yes
Can a monopoly earn economic profits in the short run?
yes it is
What is the use of assets to earn income or profits called?
investment
Is it true that entrepreneurs earn profits?
Some, but majority don't
