Question

At his current level of output, a monopolist has an MR of $10, an MC of $6, and an economic profit of zero. If the market demand curve is downward sloping and his marginal cost curve upward sloping, the monopolist:_______

Answer 1

The monopolist is in the long run.

Step-by-step explanation:

The monopolist is in the long run because, in the long run, a monopolist earns or gets zero economic profit. In the short run, it earns supernormal profit that attracts the new firms into the market and this entry continues until the economic profit becomes zero and in the long run, its price is equal to the average total cost. Moreover, the average total cost curve becomes tangent to the demand curve in the long run.