Concept:A firm earns super normal profits when its average revenue (
AR) is greater than its average cost (
AC).
Explanation:In a monopoly, there is only one dominant seller in the market.
Strong barriers to entry protect the monopolist from new competitors.
Therefore, the monopolist can maintain
AR>AC in the short run.
The same condition continues in the long run because no other firm can enter the market.
As a result, monopoly profit is not competed away over time.
Duopoly and oligopoly involve more than one seller, so their profits may be reduced by rivalry or regulation.
Monopsony refers to a single buyer, not a seller making profits.
Hence, the firm with power to make super normal profits in both runs is the monopoly.
Answer:A. Monopoly