In the long-run, the amount of economic profits: O for firms under monopolistic competition tend to diminish so that no more than normal profits can be earned, because entry barriers are fairly low, unless they can successfully and continuously differentiate their product or service. for (unregulated) monopoly firms always tends downward toward zero because consumers easily find close substitute goods or services. O for firms under perfect competition will tend to get ever higher because free entry of new firms adds to the profits of the existing firms in the market. for firms under perfect competition will tend to get higher over time because small-sized firms are constantly investing large sums of money in the latest production technologies and in innovations through research and development (R&D).
In the long-run, the amount of economic profits: O for firms under monopolistic competition tend to diminish so that no more than normal profits can be earned, because entry barriers are fairly low, unless they can successfully and continuously differentiate their product or service. for (unregulated) monopoly firms always tends downward toward zero because consumers easily find close substitute goods or services. O for firms under perfect competition will tend to get ever higher because free entry of new firms adds to the profits of the existing firms in the market. for firms under perfect competition will tend to get higher over time because small-sized firms are constantly investing large sums of money in the latest production technologies and in innovations through research and development (R&D).
Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter9: Monopoly
Section: Chapter Questions
Problem 28CTQ: Intellectual property laws are intended to promote innovation, but some economists, such as Milton...
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