Final answer:
In both SR and LR, a monopoly maximizes profits by producing where MR = MC, a principle that applies regardless of the time horizon, hence not distinguishing between them. This profit-maximizing output is graphically where MR and MC curves intersect, a strategy applicable to monopolies due to their unique control over market prices.
Step-by-step explanation:
One does not distinguish between short-run (SR) and long-run (LR) profit maximization in a monopoly because the same principle of producing where marginal revenue (MR) is equal to marginal cost (MC) applies in both time frames. In monopoly, setting this level of output for profit maximization is effective without considering total revenue and total costs directly. The monopoly firm analyzes the marginal gains from producing additional units and continues to increase output as long as MR exceeds MC. This strategic approach enables the firm to determine the profit-maximizing output level easily, as the intersection point of MR and MC on a graph represents this optimal quantity.
A perfectly competitive firm also aims to produce at a level where MR = MC; however, for such a firm, MR is equal to the price (MR = P), unlike in a monopoly where MR does not equal price due to the price effect of changing output levels. Thus, monopolies have a unique position where they single-handedly affect the market price, and their MR curve is distinctly lower than the demand curve. If a monopolist were to practice perfect price discrimination, they could theoretically capture all consumer surplus by charging each consumer the maximum they are willing to pay, leading to both higher output akin to a competitive market and maximum possible profits.