Why can a monopolist continue to make positive profits even in the long-run whil

Question

Why can a monopolist continue to make positive profits even in the long-run while a perfectly competitive firm can make only zero economic profits in the long-run?


A.Because a monopoly only has one firm while perfect competition has many.

B.Because monopoly has barriers to entry and perfect competition has free entry.

C.Because perfect competition has barriers to entry and monopoly has free entry.

D.Because in perfect competition everyone produces the same product and because in monopoly there are no close substitutes

2. Because of a patent, Alcoa is the only manufacturer of soda cans with a stay-put tab. Alcoa can earn a profit on the sale of soda cans with stay-put tabs


A. in the short run but not in the long run because new firms can enter the industry in the long run.


B. only in the long run because government regulations prevent monopolists from earning profits in the short run.


C. in the long run but not the short run because the monopolist will face competition in the short run.


D. not only in the short run but also in the long run because entry into the industry by new firms is blocked until the patent expires.

Explanation / Answer

Why can a monopolist continue to make positive profits even in the long-run while a perfectly competitive firm can make only zero economic profits in the long-run? A.Because a monopoly only has one firm while perfect competition has many. 2. Because of a patent, Alcoa is the only manufacturer of soda cans with a stay-put tab. Alcoa can earn a profit on the sale of soda cans with stay-put tabs D. not only in the short run but also in the long run because entry into the industry by new firms is blocked until the patent expires.

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