Answer to Question #276553 in Microeconomics for Ntandoh

Question

Question 12

Which one of the following statements about a monopoly is true?

A. The monopolist has a flat demand curve because of high barriers to entry.

B. For a monopolistic firm, profit will be maximised where P = MR.

C. In the long run, a monopolist can earn only normal profits.

D. Price in the long run is not usually equal to minimum average total cost.

E. A monopolist will always make economic profit in the long run.

Answer 1

C. In the long run, a monopolist can earn only normal profits.

Explanation.

Competition from new businesses causes each firm in a monopolistically efficient sector to generate conventional earnings, just as a flawlessly competitive industry. Capacity in surplus.