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Suppose two firms are engaged in price competition (also known as Bertrand competition). Neither firm has capacity constraint

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Question 26 pts Suppose two forms are engaged in price competition (also known as Bertrand competition. Neither form has capa
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Answer #1

Profit is maximized where P=MC.

Over the long run, the firm tends to operates at the minimum level of AC.

Hence,

P=MC=AC.

Hence, profit is zero.

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