Q6) In long run equilibrium the pure monopolist can make pure profits because of
Blocked entry
The high price he charges
The low LAC costs
Advertising
here the ans should be high prices he charges because he can charge whatever he wants and people will still buy from him but the ans is given as blocked entry please help
Answer is Option A i.e., blocked entry. In the long run, only monopoly firm exist and no one can or is able to enter the market due to govt. national monopoly power or other entry barriers.
Option B is incorrect as in long run the demand is elastic(elasticity of demand is high) and consumer can change his demand if he considered prices of that product to be high.
still not clear on the fact how the demand is elastic if their are no secondary options available to the consumers because in monopoly he will require the goods at whatever price available
yes he can charge whatever price but consumer will change their habits and in the long run demand will be elastic for that product so in the long run, the monopolistic will not be able to make supernormal profits.
In this question, he can earn supernormal profits if there are entry barriers in the long run.
Hope this helps!
Thankyou so much for your answers but i dont know why its still not convincing me how a consumer can change its habits isnt it the basic assumptions of the law of demand
Also its a monopolist not a monopolistic compitative firm