Supernormal profit can occur in the long run in the following market structures:

1. Monopolistic Competition: In the long run, firms in monopolistic competition can earn supernormal profits due to product differentiation. Each firm has a certain degree of market power which allows them to set their own prices and earn more than the normal profit.

2. Monopoly: A monopoly is a market structure where there is only one seller or provider of a product or service. In the long run, a monopoly can earn supernormal profits because they face no competition and can therefore charge higher prices.

In contrast, in a perfect competition market structure, firms can only make normal profits in the long run. If firms were making supernormal profits, other firms would enter the market, increasing supply, lowering prices, and eliminating the supernormal profit.

Question

Supernormal profit can occur in the long run in the following market structures:

1. Monopolistic Competition: In the long run, firms in monopolistic competition can earn supernormal profits due to product differentiation. Each firm has a certain degree of market power which allows them to set their own prices and earn more than the normal profit.

2. Monopoly: A monopoly is a market structure where there is only one seller or provider of a product or service. In the long run, a monopoly can earn supernormal profits because they face no competition and can therefore charge higher prices.

In contrast, in a perfect competition market structure, firms can only make normal profits in the long run. If firms were making supernormal profits, other firms would enter the market, increasing supply, lowering prices, and eliminating the supernormal profit.

Knowee AI · Accepted Answer

Supernormal profit can occur in the long run in the following market structures:

1. Monopolistic Competition: In the long run, firms in monopolistic competition can earn supernormal profits due to product differentiation. Each firm has a certain degree of market power which allows them to set their own prices and earn more than the normal profit.

2. Monopoly: A monopoly is a market structure where there is only one seller or provider of a product or service. In the long run, a monopoly can earn supernormal profits because they face no competition and can therefore charge higher prices.

In contrast, in a perfect competition market structure, firms can only make normal profits in the long run. If firms were making supernormal profits, other firms would enter the market, increasing supply, lowering prices, and eliminating the supernormal profit.

For what market structures does supernormal profit occur in the long run?(Баллов: 2)perfect competitionmonopolistic competitionmonopoly

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For what market structures does supernormal profit occur in the long run?

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