Describe the difference in economic profit between a competitive firm and a monopolist in both the short and long run

A monopolist firm has the ability to control supply without the challenges of competition to take market share. This firm has the ability to determine both short-term and long-term profits based on where they set their supply. Under a monopoly, the firm can identify the point on the supply and demand curve that will supply the greatest profits in both the short and long term.

Economic profit under competition will be reduced in the long-run. Under perfect competition the long-run profits will be reduce to zero. The firm may be able to generate profits in the short-run but these will eventually tend toward zero due to competition. The lack of product differentiation limits the ability of a firm to establish or maintain a competitive advantage in the market. Any realization of profits in the short-run will result in a future competitor offering the same goods at a reduced price grabbing a smaller profit on the same market share.