If a monopoly firm is making a zero profit in the short run, will the firm keep

Question

If a monopoly firm is making a zero profit in the short run, will the firm keep producing? Why or why not?
And if the firm keeps producing at where zero profit as shown in the short run, then what will happen in the long run to a firm producing at that level of output? Explain.
And do monopolies not produce at where output of level is considered socially efficient?
Also, why would a monopoly in the long run be able to profits in the long run? Please explain.


If a monopoly firm is making a zero profit in the short run, will the firm keep producing? Why or why not?
And if the firm keeps producing at where zero profit as shown in the short run, then what will happen in the long run to a firm producing at that level of output? Explain.
And do monopolies not produce at where output of level is considered socially efficient?
Also, why would a monopoly in the long run be able to profits in the long run? Please explain.



And if the firm keeps producing at where zero profit as shown in the short run, then what will happen in the long run to a firm producing at that level of output? Explain.
And do monopolies not produce at where output of level is considered socially efficient?
Also, why would a monopoly in the long run be able to profits in the long run? Please explain.

Explanation / Answer

1) Yes, firm will continue its production because firm is able to cover all its cost i.e. fixed cost and variable cost. Firm will not shut down because if firm do that then firm will suffers loss of fixed cost.

2) If firm continue to produce in the short run at zero profit then in long run some existing firms will exit from the industry which reduces competition in the long run and firm is able to earn normal profit.

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