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5. Individual Problems 9-5 Describe the difference in economic profit between a competitive firm and a...

5. Individual Problems 9-5
Describe the difference in economic profit between a competitive firm and a monopolist in both the short and long run. Which should take longer to reach the long-run equilibrium?
In the short run, both monopolists and competitive firms earn positive economic profits. In the long run, can earn a positive economic profit.
True or False: The adjustment to long-run equilibrium occurs more quickly for competitive industries than for monopolists.

True
False

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Answer #1

a) Short run, A competitive firm in the short run can make an profit just like the monopolist will make it in the short run. In the long run, only a monopolist will make a profit and the competitive firm will be breaking even as the competitive firm in the market have free entry and exit.

b) the adjustment to long run equilibrium occurs more quickly for a competitive firm, this statement is "True".

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