Why do total monopolies and oligopolies create excess profits?

Please be sure to understand whether you can make excess profits in any market.

The key depends on how easy it is to get in and out of the market.

Complete monopoly, oligopoly.

The characteristics of large scale, strong assets and equipment determine that it is very difficult for them to enter and exit the market, or it is basically impossible, especially for complete monopoly manufacturers, which also determines the existence of their short-term excess profits.

Do you understand?

Perfect competition refers to a market structure in which competition is not hindered or interfered with in any way.

A complete monopoly refers to a market structure in which there is only one producer in the entire industry.

Monopolistic competition refers to a market structure in which many manufacturers produce and sell similar products with differences, and there are both competitive and monopoly factors in the market.

An oligopoly is a market structure in which a few manufacturers control production and sales in the entire market.

Imperfect competition refers to the fact that some industries may be controlled by a small number of enterprises because of the characteristics of the larger the scale of operation, the better the economic efficiency, the continuous decline of marginal costs, and the increasing return of scale, thus producing a monopoly phenomenon.

1. The balance is like this. In a perfectly competitive industry, if the economic profit is at zero, because there are no barriers in the industry, a large number of external enterprises will enter the investment with the wide industry, the output of products will rise, the first will fall, and the profit will be zero. 2. If the economic profit is less than zero, because there are no exit barriers in the industry, a large number of enterprises in the industry will withdraw from the industry and make no money if they don't play.

The decrease in production, ****, and the return of profits to zero seem to be well understood. (1) Perfectly competitive market elements are liquid. In the long run, once the economic profit is greater than 0, there will be new enterprises entering, so ** will decline, and the profit will eventually drop to 0.

Once the economic profit is less than 0, the enterprise will exit, **will** and the profit will eventually be 0. Therefore, the economic profit of perfectly competitive enterprises can only be 0 in the long run; (2) However, there are barriers to entry in the complete monopoly market, and the short-term economic profit can be maintained in the long run, and the loss can also be adjusted to the economic profit of 0 by restricting the output of the enterprise

This is because in the long run, monopoly competitors can not only adjust the scale of production, but also join or withdraw from production. Therefore, the profit of Hu Xufan in the long-term equilibrium is 0.

The models studied in economics are basically idealized models, which are often very extreme, and there are no such exceptions in life, there may be a monopoly market, but it will not be 100%, of course, there is a competitive market, but it is not 100% perfect competition.

If you use mathematical notation.

It means that it can be said that it is reluctantly said that the accounting profit.

Economic profits. Returning to the topic, it is entirely possible for the economic profit of the enterprise to be 0, because the income of the enterprise may be equal to the economic profit and greater than the accounting profit, and greater than the accounting profit can fully ensure that the enterprise continues to stay in the market for business activities.

Extended information: There are two demand curves faced by monopolistic competitors, which are divided into D and D curves. The d-curve represents the subjective demand curve, which refers to the demand curve faced by a manufacturer in the production group when the manufacturer changes its product and other manufacturers do not adjust accordingly.

The D curve represents the objective demand curve, which refers to the demand curve faced by a manufacturer in the production group when it changes its products and other manufacturers make corresponding adjustments.

The demand curve D of the production group is even less elastic.

It appears steeper. Because it represents people's demand for a type of item, it cannot be replaced by a replacement manufacturer.

Monopolistic competitive market.

The degree of competition is larger, the degree of monopoly is smaller, and it is relatively close to perfect competition. It is common in the retail, handicraft, and printing industries in real cities. Figure 1 illustrates the key differences between the four market structures.

Advantage. But this does not lead to a perfectly competitive market.

The conclusion that it is better than the monopolistic competitive market is boring. Because although the average cost of flat pants in the monopolistic competition market is high and resources are wasted, consumers can get differentiated products to meet different needs. Moreover, the output in the monopolistic competition market is higher than that in the complete monopoly market.

But it should be low.

Under the condition of complete monopoly, there will be no new manufacturers entering the market in the long run. Monopoly manufacturers can maximize long-term profits by adjusting the scale of production. There is no adjustment in the number of manufacturers in the process of forming a long-term equilibrium in a completely monopolistic market, so the long-term equilibrium of a monopoly industry is not marked by the disappearance of profits.

If a monopoly maker makes a profit in a short period of time, it can still make a profit in the long run as long as the demand situation does not change. Hail.

I choose CBecause Pai is maximizing profits when setting prices for monopolies, there is MR=MC (marginal benefit equals marginal cost), and ** is obviously higher than MC (monopoly).

In the long-term equilibrium of the monopolistic competitive market, excess profits will be equal to zero, because it is easy for new manufacturers to enter the industry.

Summary. Dear, I am glad to answer for you, the difference between monopoly competition and oligopoly long-term profits is that monopolistic competition market entry and exit are relatively free, while oligopoly market has entry barriers, and monopoly competition manufacturers have zero long-term profits, while oligopoly markets are not zero and in the long run are zero profits and excess production capacity. The main differences between the two are:

There are many monopolistic competitors, but the scale is relatively small.

Dear, I'm glad to answer for you, the difference between monopoly competition and oligopoly long-term profits is that monopolistic competition is free to enter and exit the market, while the oligopoly market has barriers to entry, and the long-term profits of monopoly competitors are zero. The main difference between the two is that there are many monopolistic and competitive enterprises, but the scale of the crack is relatively small.

Monopolistic competition is one of the main forms of market, and the concept in economics is that the market structure that is infinitely close to perfect competition is different from the many commercial products provided by various producers, but there is no essential difference. It is the most common form of existence in real life, and the market has a large number of producers and consumers, and consumers have obvious preferences, and goods and services are not homogeneous.