Question: Economists generally believe it is difficult to sustain profits in the long run under any market structure. However, the reasons for this may differ in different markets. In this context, write a short essay (two pages with references) that addresses the following:
1) What are economic profits?
2) Why do firms typically not earn economic profits in the long run?
3) What would allow a firm to earn economic profits in the long run? Give a real-world example.
4) As part of your essay also make sure to compare and contrast what generally happens to profits for the typical firm in the long run under the following three market structures: (1) perfect (or pure) competition, (2) monopolistic competition, and (3) pure monopoly.