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 In the long run monopolist can 
  • a)
    Incur losses 
  • b)
    Must earn super normal profits 
  • c)
    Wants to shut-down 
  • d)
    Earns only normal profits 
Correct answer is option 'B'. Can you explain this answer?
Verified Answer
In the long run monopolist cana)Incur lossesb)Must earn super normal p...
Super Normal Profit : If the price (AR) fixed by the monopolist in equilibrium is more than his average cost (AC) then he will get super normal profits. The Monopolist will produce up to the extent where MC = MR and MC curve cuts MR curve from below. This limit will indicate equilibrium output If the price of equilibrium output is more than average cost (AR > AC) then the monopolist will earn super normal profits.
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In the long run monopolist cana)Incur lossesb)Must earn super normal profitsc)Wants to shut-downd)Earns only normal profitsCorrect answer is option 'B'. Can you explain this answer?
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