Question

A monopoly firm can earn super normal profit in the __________.

• A. long-run
• B. short-run
• C. both (a) and (b)
• D. none of the above

Answer 1

The correct option is C both (a) and (b)

The monopoly firm can earn super normal profit both in the long and short run. This is because there is no competition and with supernormal profits usually there is entry of new firms, however under the monopoly market structure there is barrier to entry of new firms and hence the monopoly firm enjoys super normal profits.