Asked by Chris Cooke on Sep 24, 2024
Verified
In the short-run,a monopoly is most likely to achieve
A) An average rate of return
B) Above average profits
C) Economic Profits
D) Both B&C
Economic Profits
The excess of total revenues over total costs, including both explicit and implicit costs, indicating a return above the firm's opportunity costs.
Average Rate
The mean value of a set of rates or percentages, calculated as the sum of all rates divided by the number of rates.
Above Average Profits
Earnings that surpass the norm or average level within a particular industry or market.
- Determine the circumstances that enable monopolies to secure economic gains.
Verified Answer
AK
Anthony Kanel2 days ago
Final Answer :
D
Explanation :
In the short-run, a monopoly is likely to have above-average profits due to its ability to set high prices and restrict output, resulting in higher profit margins. However, if the monopoly is able to maintain its market power in the long run, it may also earn economic profits, which are above the normal rate of return. Therefore, both B and C are correct.
Learning Objectives
- Determine the circumstances that enable monopolies to secure economic gains.