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23 November, 17:54

Which of the following is true of monopoly but not true of perfect competition? A. Firms can potentially earn economic profits in the short run. B. Total revenue is the product of price times the quantity sold. C. Firms can potentially earn economic profits in the long run. D. A profit-maximizing firm will shut down if price falls below the average variable cost.

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  1. 23 November, 20:21
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    The correct answer is option C.

    Explanation:

    In a perfect competition the firms can enjoy profits only in the short run. In the long run new firms enter the market leading to increase in supply. This further causes price to fall. This process continues till the profit is exhausted.

    Where as in the monopoly there is restriction on the entry of other firms in the market. So, in monopoly market the firm will enjoy profit in short run as well as long run.

    Total revenue in both markets is equal to price times quantity.

    Firms in both market have profit in short run.

    In both the markets a profit maximizing firm will not produce if price falls below the average variable cost.

    So, the correct answer is option C.
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Home » Business » Which of the following is true of monopoly but not true of perfect competition? A. Firms can potentially earn economic profits in the short run. B. Total revenue is the product of price times the quantity sold. C.
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