Question

Which of the following market structures are likely to have long-run profits that are greater than zero?

I. Monopoly
II. Oligopoly
III. Perfect competition

I and II

II only

III only

I only

I, II, and III

If a monopolist practices perfect price discrimination,

there is more consumer surplus than for monopolistic competiion.

consumers pay more for the good than they are willing to pay.

there is more consumer surplus than for a single priced monopolist.

all consumers pay the same price for the product.

there is no consumer surplus in the market.

Answer 1

1. Ans: I and II

Explanation:

In case of monopoly since there are only one firm in the industry, it can earn positive economic profit even in the long run.

In case of oligopoly since their are few sellers of a product, they can also collude and behave like a monopoly and can earn positive economic profit even in the long run.

But in case of perfect competition, since their are large numver of sellers and in the long run due to entry and exit of the firms into the industry, they can only earn zero economic profit.

Thus, option[1] is correct.

2. Ans: there is no consumer surplus in the market.