Final answer:
A pure monopolist, due to lack of competition and high barriers to entry, is more likely to earn economic profits compared to a pure competitor. In perfect competition, economic profits are competed away in the long run, leading to a normal profit outcome, whereas a monopolist can sustain economic profits over time.
Option 'E' is the correct.
Step-by-step explanation:
The question of which outcome is more likely for a pure monopolist compared to a pure competitor addresses the dynamics of market structures in economics. For a pure monopolist, which is a firm that is the sole seller in the market and has significant control over the pricing and quantity of the product, economic profit is more likely.
In contrast to perfect competition, where firms enter and exit freely leading to zero economic profits in the long run due to competitive pressures, a monopolist can maintain positive economic profits due to high barriers to entry and absence of competition.
Thus, the correct answer is E. economic profit. In a monopoly, where there are high barriers to entry and no close substitutes for the product, the monopolist can set prices above marginal cost without inducing immediate entry by new firms, thus earning an economic profit. In a perfectly competitive market, positive economic profits are temporary and attract new entrants, driving down prices and profits until they reach a normal profit level, where economic profit is zero.
Entry and exit of firms are key factors in determining the economic outcomes. In monopolistic competition, entry and exit drive the market towards a zero economic profit outcome in the long run, while in a monopoly, high barriers prevent this adjustment, allowing the monopolist to sustain economic profits. If firms form a cartel, they might attempt to mimic these monopoly outcomes by limiting production and increasing prices, thereby achieving economic profits unless legal or other market forces disrupt their agreement.