Which one of the following helps to explain why long-run abnormal profits are absent in a perfectly competitive market but can persist in a monopoly market?
Monopolists face a perfectly elastic demand curve which allows them to raise prices without losing customers.
In a perfectly competitive market, the absence of barriers to entry allows new entry to erode abnormal profits.
Perfectly competitive firms spend heavily on persuasive advertising to maintain market share, which reduces long-run profits.
Monopolists always operate at the minimum point of their average cost curve, assuring high profit margins.
