Asked by jason crespo on Jul 04, 2024

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In the long run,a monopoly's

A) ​economic profits are zero
B) economic profits are negative
C) economic profits are positive
D) ​demand is perfectly inelastic

Economic Profits

The difference between total revenues and total costs, including both explicit and implicit costs, signaling the overall profitability from an economic standpoint.

Perfectly Inelastic

A situation in economics where the quantity demanded or supplied does not change in response to changes in price.

  • Ascertain the conditions allowing monopolies to attain economic profitability.
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ZK
Zybrea KnightJul 06, 2024
Final Answer :
A
Explanation :
In the long run, a monopoly's economic profits are zero due to the entry of potential competitors. As the barriers to entry in the market decrease or eliminated, new firms will begin entering the market which will take away market share and reduce the monopoly's market power. This will eventually drive down profits towards a level of zero. Therefore, economic profits become zero over the long run.