So I'm studying market structures for the end of term, and I'm a bit confused about excess profits.
From what I can see, excess profits occur when the demand curve intersects the AC curve - the MR=MC quantity leads to a price which is above AC, and thus the firm earns excess/economic profits (as in monopoly). If the demand curve were tangent to the AC curve (as in long-run monopolistic competition), there are no excess profits, because the firm produces at AC.
My question is: is there any reason why the demand curve faced by a monopolist isn't just tangent to the AC curve? Or is it that this is the only situation where the monopolist doesn't earn economic profits? See the diagrams below.
Finally, what does this mean for a firm in a Cournot duopoly equilibrium, with no collusion? Does the competition from its rival leave it with a similar result as the firm in monopolistic competition with the demand curve tangent to the AC curve, or does it enjoy excess profits?