What can a pure monopolist expect to earn in the short run?

In the short run, a pure monopolist can experience various outcomes, including earning an economic profit, incurring a loss, or breaking even. This variability is largely dependent on the demand for the monopolist's product and the relationship between total revenue and total cost.

A monopolist has market power, meaning it can set prices above marginal cost. If the price charged for the product exceeds average total costs, the monopolist will earn an economic profit. Conversely, if market demand decreases or if costs increase such that average total costs exceed the price that consumers are willing to pay, the monopolist may incur losses. Furthermore, under certain conditions, if total revenue equals total costs, the firm will break even.

This flexibility in outcomes reflects the monopolist's ability to adjust prices and production levels in response to market conditions, allowing for the possibility of any of these three financial scenarios. Thus, the statement that a monopolist can either earn an economic profit, incur a loss, or break even accurately characterizes the realities of their short-run operations.