Question

In: Economics

In at least 200+ respond to the following (please include any references used) Describe the difference...

In at least 200+ respond to the following (please include any references used)

Describe the difference in economic profit between a competitive firm and a monopolist in both the short and long run. Which should take longer to reach the long-run equilibrium? Why?

Solutions

Expert Solution

Perfect competitors describe a scenario existing in a market in which sellers and purchasers are so plentiful and well well-informed and the market cost of an item is not within the control of individual sellers and buyers. A monopoly is the market structure where there is a single seller or company that supplies products and services in the entire market. There are barriers to entry and exit of brand-new companies in this market structure.
In the short run, both Monopoly and Perfect competitors make favorable financial earnings. A monopoly company makes favorable economic earnings in the brief run as the Monopolist is a sole seller. There are heavy barriers to entry and exit of firms so there is no worry of competitors too. Perfect Competitive firm earns positive financial revenues in the short run as there is a lot of purchasers and sellers. All the companies sell uniform products at a uniform price. The difference in economic revenues in between a competitive firm and a Monopoly firm in the brief run depends on the sense that Monopolist makes more financial revenues than a perfectly competitive firm because of the cost discrimination, i.e. charging various prices from numerous consumers.
In the long run, Perfect Competitive firms make zero financial earnings because of the complimentary entry and exit of the firms. It suggests that if the best competitive firms are making financial revenues in the brief run, numerous new companies will enter the market and thereby get rid of economic revenues. On the other hand, if firms are incurring losses in the market, existing firms will leave the market and thus all the competitive companies make zero financial profit in the long run. Monopoly company might make a positive financial revenue, zero economic revenue or negative economic earnings based on the below 3 condition
Condition 1: Market Price > Equilibrium Price => Positive economic profits
Condition 2: Price = Minimum of ATC curve => Zero economic profits
Condition 3: Price < Minimum of ATC curve => Negative economic profits

The distinction in financial revenues in between a competitive firm and a Monopoly firm, in the long run, lies in the sense that a Perfect Competitive firm will certainly earn zero financial revenues whereas, Monopolist profits depends upon the above-explained conditions. A monopoly company might take longer to reach the long-run stability.


Related Solutions

In at least 200+ respond to the following (please include any references used) Take a look...
In at least 200+ respond to the following (please include any references used) Take a look at the following information and answer the question below: If long-run average costs are constant with respect to output, then you have constant returns to scale. If long-run average costs rise with output, you have decreasing returns to scale or diseconomies of scale. If long-run average costs fall with output, you have increasing returns to scale or economies of scale. Every company is trying...
In at least 200+ respond to the following (please include any references used) Companies face pricing...
In at least 200+ respond to the following (please include any references used) Companies face pricing decisions on an almost daily basis and while the market itself through the equilibrium point tends to set the market price, companies have some maneuverability within that market price (it is really more of a market price range, so to speak). However, changing their price will have consequences on the quantity demanded known as the price elasticity. How do companies determine how elastic (or...
In at least 225 words answer the following: (Please cite any references used) What is the...
In at least 225 words answer the following: (Please cite any references used) What is the difference between top-down and participative budgeting? Which method do you think is the most effective, and why?
6-10 sentences and please include any references if used. What would Travis Hirschi say about using...
6-10 sentences and please include any references if used. What would Travis Hirschi say about using incarceration as a form of punishment? Based on his control theory, would he be for or against incarceration? Support your position.
Please use at least 200 words to describe each of the following questions: To minimize the...
Please use at least 200 words to describe each of the following questions: To minimize the uncertainty in a new instrument for measuring distance, would it be better to calibrate the new instrument with the PDT or the Ultra-sonic Sensor? Also, if possible, discuss how to use the value of the range, total uncertainties, and full-scale error of PDT and The Ultra-Sonic Sensor to select a sensor for a specific application
Please use at least 200 words to describe the following questions: Evaluate the calibration of the...
Please use at least 200 words to describe the following questions: Evaluate the calibration of the PDT and ultrasonic sensor system by discussing the significance of: The maximum linear error in distance and the percent full-scale error.
I need an abstract on black, white, and gray hat hackers. please include any references
I need an abstract on black, white, and gray hat hackers. please include any references
PLEASE RESPOND IN 200 WORDS THANK YOU. How can the cost of capital be used as...
PLEASE RESPOND IN 200 WORDS THANK YOU. How can the cost of capital be used as a discount rate in analyzing investments?
Please read and respond to the three questions below. Please comment or respond to at least...
Please read and respond to the three questions below. Please comment or respond to at least two of your classmates in addition to your initial post. Do not forget to cite your sources. 1. Under what conditions of bond issuance does a discount on bonds payable arise? Under what conditions of bond issuance does a premium on bonds payable arise? 2. How should discount on bonds payable be reported on the financial statements? Premium on bonds payable? 3. What are...
Describe the marketing communication tools used in a Marketing Communications Mix. please mention the references
Describe the marketing communication tools used in a Marketing Communications Mix. please mention the references
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT