What is a key factor that can impact whether a monopolist earns an economic profit?

A key factor that can significantly impact whether a monopolist earns an economic profit is consumers' demand for the product. In a monopolistic market, a single firm is the sole provider of a good or service, which gives it substantial power over pricing. The level of demand for that product directly influences its price and, consequently, the firm's revenue.

If consumer demand is high, the monopolist can set a higher price, maximizing its profits. Conversely, if demand is low, even a monopolist may struggle to maintain high prices without losing customers. Understanding this relationship is crucial, as demand elasticity also plays a role; inelastic demand means consumers will continue to buy regardless of price increases, while elastic demand could lead to significant drops in quantity sold at higher prices.

Other factors, such as the number of firms in the industry, the elasticity of supply, and market regulations, can have an impact on the overall market dynamics and competitive environment, but they do not directly influence a monopolist's ability to earn economic profits in the same way that consumer demand does.