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profits in the long-run

(1) Assume that firms in the short-run are earning above-normal profits. Explain what will happen to these profits in the long-run for the following markets:

(i) Pure monopoly

(ii) Oligopoly

(iii) Monopolistic competition

(iv) Perfect competition

Solution Preview

In perfect competition, firms will only make normal profit or zero economic profit in the longer run as other firms can freely enter the market.

For monopoly, profit is super normal or above normal ...

Solution Summary

Explain what will happen to these profits in the long-run for the following.

$2.19