Do you agree that companies under perfect competition as well as monopoly are making profits in...

Do you agree that companies under perfect competition as well as monopoly are making profits in the long run? If yes, why? If not, why not?

Expert Solution

Ans. 1. = No, Under Perfect Competition, firm earns only Normal Profits means Zero Economic Profit but Under Monopoly, Firm earns Super Normal Profits in Long Run.

a) Suppose in Short Run, Perfectly competitive firms earns super normal Profits then In Long Run, more and more firms would get attracted towards this profit making industry -> It would Increase the Supply in the Industry -> As supply increases prices would go down -> Hence, Super Normal profits would become Normal Profits in Long Run.

Firms in Perfectly Competitive Market earns Normal Profits, due to the Free Entry and Exit of the Firms.

b) But in Monopoly, firms may maintain to earn Super Normal Profits even in Long Run.

As profits depend on Level of Competition, If there is Less Competition then Profits would be Higher and If there is High Competition then Profits would be Lower.

There is Less or No Competition in Monopoly due to the Restrictions on Entry and Exit of New firms.

Rahul Sunny answered 9 months ago

Do you agree that companies under monopolistic competition can have a profit in the long run?If...

Do you agree that companies under monopolistic competition can have a profit in the long run?If yes, why? if no, why not?

Why is mutual interdependence important under Oligopoly but not so important under Perfect Competition, Monopoly or...

Why is mutual interdependence important under Oligopoly but not so important under Perfect Competition, Monopoly or Monopolistic Competiton? How would Game Theory feature in your response?

characteristics of perfect competition, monopoly, monopolistic competition & oligopoly

There are four types of market structures: perfect competition, monopolistic competition, oligopoly, and monopoly. “Perfect competition...

There are four types of market structures: perfect competition, monopolistic competition, oligopoly, and monopoly. “Perfect competition describes a market structure, where a large number of small firms compete against each other” (Zeder, 2016). With a perfect competition market structure firms maximize profits, firms can enter and exit the market as they please, firms sell identical goods, and there are no consumer preferences. “Monopolistic competition refers to a market structure, where a large number of small firms compete against each other”...

Give examples of your own for perfect competition and monopoly. Explain why they fit into the definitions of perfect competition and monopoly.

5.) Perfect Competition, Monopoly, and Monopolistic Competition Few industries satisfy the conditions of perfect competition. Nevertheless,...

5.) Perfect Competition, Monopoly, and Monopolistic Competition Few industries satisfy the conditions of perfect competition. Nevertheless, perfect competition is studied because it represents a case in which the market mechanism works well. Therefore, it is a useful model to measure the performance of other market forms. How can perfect competition act as a guide for government regulators?

(b) Draw a diagram that shows a firm under perfect competition making a profit in the...

(b) Draw a diagram that shows a firm under perfect competition making a profit in the short run. How is price determined in this case? (c) Draw a diagram to illustrate the case of perfect competition where there is a negative production externality. Show how, if the production externality is ignored, output will differ compared to the alternative where society’s needs are taken into account. Explain briefly how a tax could be relevant in achieving the social optimum (a) Sketch...

4. How is this different from Perfect Competition? Monopoly is different from perfect competition, in ways...

4. How is this different from Perfect Competition? Monopoly is different from perfect competition, in ways that: A. Monopoly has one firm that is price maker, but in perfect competition has many firms with free entry and exit and firms are price takers. B. Monopoly earns positive economic profit in long run, but perfectly competitive firm earns zero economic profit in the long run. C. Perfect competition achieves productive & allocative efficiency, but monopoly firm is inefficient. 5. Draw three...

List the characteristics of perfect monopoly, oligopoly, and monopolistic competition.

using graphs, describe how prices and output decisions are made under : a)perfect competition b) monopoly...

using graphs, describe how prices and output decisions are made under : a)perfect competition b) monopoly c) describe the concept of economic profit and how profits can occur under each of the markets described above

Question