Question

What is the likelihood Oligopoly firm will earn economic profit in the long run? Explain.

Answer 1

Answer- Oligopoly is a market structure in which there are a few sellers who are considered to be proce setters and not takers. There is also high restriction on entry as the firms which are existing maintain a brand image. An oligopoly firm would earn abnormal profits in the long run. The reason behind this is the strict entry and exit procedure that prevent other firms from entering the fierce competition and taking the economic prfits. Due to presence of few large firms that are engaged in fierce competition the firms are able to get economic or abnormal profits in the long run as they don’t have to share it with other firms in the ling run.