Re: compitive markets

Posted by lovekesh on Apr 05, 2012; 2:06pm
URL: http://discussion-forum.276.s1.nabble.com/compitive-markets-tp7438272p7440056.html

This is where i have doubt. If there are only TWO firms instead of many firms of two types, then i don't see any reason why those TWO firms won't behave as monopolist and earn profits over 20000. But if there are two types of many firms, then there is an opportunity for a long run equilibrium with economic profits to be zero. The answer you gave was correct. It's 20000 only. You just put 20000 as profits and solve for Q1 and Q2. Put Q1 and Q2 into demand curves and get P1 and P2.