Explain, using diagrams, why a monopoly can potentially earn super-normal profit in both the short...

Question

Explain, using diagrams, why a monopoly can potentially earn super-normal profit in both the short run and the long run, while perfectly competitive firms can only earn normal profit in the long run.

David · Accepted Answer

Question: 
Explain, using diagrams, why a monopoly can potentially earn super-normal profit in both 
the short run and the long run, while perfectly competitive firms can only earn normal profit 
in the long run. 
Solution: 
Figure below explains the difference between the profitability of monopoly and perfect 
competition in long and short run. The supply curve S under perfect competition is the 
resultant supply curve of many competitive firms in the industry.

Explain, using diagrams, why a monopoly can potentially earn super-normal profit in both the short run and the long run, while perfectly competitive firms can only earn normal profit in the long run.

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