Question

what is a monopolist and what is required for a monopolist to earn profits in the long run

Answer 1

A monopolist is such a firm which is the only producer of a particular good in the entire market . The good has no close substitutes in the market . So a monopolist has market power to decide the price of the good and quantity sold .

Monopolies can maintain super-normal profits in the long run . As with all firms in a market , profits are maximized when MC = MR ( Marginal cost = Marginal Revenue ) . In general, the level of profit depends upon the degree of competition in the market . Like in case of perfect competition firms earn zero economic profit in long run . but in monopoly , the competition is zero so it earns super- normal profits .

The requirements for a monopoly to earn profits in the long run is : producing at MR = MC , to keep competition low in the market .