Which of the following statements about the differences between monopoly and perfect competition is incorrect?
A)A monopolist has market power, while a perfect competitor does not.
B)Unlike a perfectly competitive firm, a monopoly can make positive economic profits in the long run.
C)A monopoly will charge a higher price and produce a smaller quantity than a competitive market with the same demand and cost structure.
D)Monopoly profits can continue to exist in the long run because the monopoly produces more and charges a higher price than a comparable perfectly competitive industry.

Question

Quizplus · Accepted Answer

Monopoly profits cannot continue to exist in the long run because the availability of supernormal profits will attract new entrants into the market, eroding the monopoly's market power. Therefore, the statement that monopoly profits can continue to exist in the long run because the monopoly produces more and charges a higher price than a comparable perfectly competitive industry is incorrect.

Which of the Following Statements About the Differences Between Monopoly