In perfect competition, one result of the model was that there was no positive economic profit (just a normal profit) in the long run. In a monopoly, the firm typically earns a positive economic profit. Why is there a difference? Explain the profit-maximization rule for employing factors of production. Explain in terms of our different factors of production (land, labor, and capital) and how firms will choose how much of each factor to employ.

In perfect competition, one result of the model was that there was no positive economic profit (just a normal profit) in the long run. In a monopoly, the firm typically earns a positive economic profit. Why is there a difference? Explain the profit-maximization rule for employing factors of production. Explain in terms of our different factors of production (land, labor, and capital) and how firms will choose how much of each factor to employ.

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter9: Market Structure And Long-run Equilibrium

Section: Chapter Questions

Problem 4MC

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