long-run equillibrium of a monopolistic market since the demand curve would have been targent to the firms average cost curve and thus making the firm unable to make profits beyond the break-even point.
Thus the diagram does not depict a long-run equilibrium but instead shows a short-run one. Unlike monopoly and perfect competition markets, monopolistic markets have many sellers and freedom of entry and exit. In the short-run, firms can make supernormal profits. In the long-run, however, these profits would attract more firms into the market, and lower the existing firms’ demand, causing the average cost to be equal to prices (Bertoletti and Etro, 2017). The firms would then make normal profits, and inefficient ones are highly likely to exit the market.