Question

Does this monopolist earn economic profit or incur economic loss? How do you know?​

Answer 1

Answer:

Companies in a monopolistic competition make economic profits in the short run, but in the long run, they make zero economic profit. The latter is also a result of the freedom of entry and exit in the industry.

Answer 2

Answer:

Monopolists always make economic profits. Monopolists are price takers. If a monopolist earns $5,000 when it sells 100 units of output and $5,025 when it sells 101 units of output, then the marginal revenue of the 101st unit is $25. If a monopolist has a linear demand curve, then it has a linear marginal revenue curve.

Step-by-step explanation:

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