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2d Over the course of a long period of time, a monopolist will either generate a positive or negative economic profit… 5d A monopolist faces a demand curve less elastic than the demand curve for a perfectly competitive
The Short Run and the Long Run of Monopoly, Taught by Professor Ryan
28 questions found in related categories
Is it possible for a monopolist to turn a profit over the course of their business?
Even in the long run, businesses are unable to enter a market if there are significant obstacles to doing so, such as high entry barriers. As a result, it is conceivable for the monopolist to avoid competition and continue producing good economic profits over the long run.
Do oligopolies generate long-term profits?
Oligopolies have the ability to sustain anomalous earnings over the long term. When there are high barriers to entry, it makes it difficult for new businesses to enter the market and take advantage of the excess earnings… Oligopolies are often made up of a handful of extremely large companies. Because each company is so enormous, the activities that they take can alter the conditions of the market.
Would a monopolist continue to manufacture if they knew there was no chance of making a profit?
To the contrary, a monopolist will only create if they are making significantly higher profits than usual. O No, they would leave the market in the long run O No, they would close down in the short run O No, they would leave the market in the long run Well, we are discussing financial profit in this context; hence, we can assume that they are still receiving the “regular” rate of return from the market.
What kinds of profits does a monopoly have the potential to earn in the short run and in the long run? Please explain.
A company that is profitable in the short term will, on the other hand, just break even in the long term due to the fact that demand will fall and average overall costs will grow. This indicates that a monopolistically competitive company will produce no economic profit over the course of the long run.
Why is it possible for a monopoly to turn a financial profit even over the course of many years quizlet?
Barriers to entry restrict competing businesses from entering a market, which would otherwise result in profit sharing by those businesses. This allows monopolies to gain economic profit over the long term.
How can you figure out the profit over the long run?
Long-term equilibrium requires not only that the average total cost be reduced, but also that the price be equal to the average total cost. The following are the procedures that need to be taken in order to calculate the long-run quantity of output produced by your company as well as the price of the good: The derivative of the average total cost should be taken.
Why does it not make sense for there to be any economic profit in the long run?
Because the introduction of new competitors brings the price of the good or service down, there will be no economic profit in the long run. In markets where there is little to no competition, economic profit may be positive. Barriers to entrance, the market strength of the firms, and a general lack of competition can all contribute to an uncompetitive market’s ability to generate positive profits.
Why do companies that compete with each other produce no profit?
Because new firms are free to enter the market at any time, businesses operating in an environment of perfect competition never generate economic profits over the long term. The difference between the total income obtained by the company from the sale of commodities in demand and the opportunity costs of all goods and services used by the company is the definition of economic profit.
How might monopoly possibly result in extraordinary profits over the long term?
In the long run, monopolies can sustain abnormally high levels of profitability. When the MC equals the MR, a company’s profits are at their highest level…. At the point when profits are maximized, the MC equals the MR, output is Q, and pricing is P. Since the price (AR) is higher than the ATC when Q is reached, exceptional profits are a distinct possibility.
In the long run, what happens to the company’s profits?
When there is complete and total competition in a market, companies can only experience either profits or losses in the short term. Because an unlimited number of enterprises are manufacturing endlessly divisible and identical items, profits and losses are eliminated in the long run. This is because the products are homogenous.
What consequences does having a monopoly bring in the long run?
Companies operating in both competitive and monopolistic markets have the potential to achieve abnormally high profits in the short term… As a result, over the long term in competitive markets, both prices and profits will see a downward trend. On the other hand, in the long run, prices and profits can remain high in monopolistic situations.
What kind of outcomes are possible for a profit-maximizing corporation operating in a market that is monopolistically competitive when it reaches long-run equilibrium?
When a company whose goal is to maximize profits operates in a market that is monopolistically competitive and produces the quantity that corresponds to the long-run equilibrium, the company will experience positive economic profits. d. the demand curve will have a shape that is tangent to the average total cost curve.
What would be considered a typical profit?
A profit metric known as “normal profit” takes into account both explicit and implicit costs when calculating overall profit. It’s possible to look at it in relation to making a profit economically. When the difference between a firm’s total revenue and the sum of its explicit and implicit costs is equal to zero, the company is said to be making a normal profit.
Is it possible for a monopoly to end up losing money in the long run?
Even though monopolists have the ability to maintain abnormally high profits over the long term, this does not guarantee that they will. It’s possible for monopolists to be revenue-maximizing or loss-making at the same time… If abnormal profits can be made in the long run, then more companies will enter the market, which will result in the elimination of abnormal profits.
Is it possible for a monopoly to turn a profit in the short term?
Although a monopolistic competitive corporation may be able to make a profit in the short term, the long-term result of its pricing policies, which are comparable to those of monopolies, will be a reduction in demand. The price will be established at the point on the average revenue (AR) curve that corresponds to the quantity of product that is produced. As a consequence of this, over the course of time the company will achieve profitability.
Why is it that monopolies have the ability to make a profit?
When a company has a monopoly, the price is always set higher than the company’s marginal cost, and the company always has a positive economic profit. When there is perfect competition, an equilibrium is created in which the price and quantity of a good are optimal from an economic perspective.
Do perfectly competitive markets, over the long run, result in efficient outcomes, Chegg?
Are perfectly competitive markets, in the long term, the most productive and efficient form of market structure? Because production costs are kept as low as feasible on average, the answer is yes.
In the long run, what kind of effects do oligopolies have?
When the average cost and demand are equal to one another, this will mark the beginning of the long-term equilibrium. As a consequence of this “cutthroat rivalry,” the oligopoly will not generate any economic profits, as will be demonstrated in the following figure.
Is Netflix a member of the oligopoly club?
Oligopoly can be described as the type of market structure in which Netflix works. An oligopoly is a situation in which a small number of firms control the majority of the market. The three companies Netflix, Hulu, and Amazon Prime Video are the most formidable rivals in the streaming business… Due to the fact that Netflix is the market leader, this company has a significant amount of influence over the market.
What are some of the advantages that come from massive oligopolies’ use of advertising?
Advantages that can accrue to oligopolies as a result of collusion: That leads to an rise in profits. It could prevent new competitors from entering the market. That makes price fluctuations less likely.