If in the long run super normal profits can be made by a firm, it means the firm belongs to _______.

perfect competition market

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monopolistic competition market

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monopoly market

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oligopoly market

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Solution

The correct option is C monopoly market
In a monopoly competition, there is only one seller and huge number of buyers due to which there remains no competition for the seller and no substitutes for the buyers. Due to this reason seller can practice price discrimination whenever they want to earn super normal profits. Therefore, the firm usually earn super normal profit inthe long run.

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Why can a firm not earn abnormal profits under perfect competition in the long-run? Explain.

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