1.

 Differentiate short-run from long-run. 

In a short run profits attract the other firms see the profits and enter the industry to set up
that causes to increase the supply by putting the price downward that results the entry to stops
when there are no more profits to attract other firm until the average total cost will be equal to the
price. Meanwhile in a long run, the firm’s profit is always equal to 0.

 Why will companies in a perfect competition market get zero economic profits in the long-
run?

Since the firm is in a perfect competition, the long-term profit will be affected. The firm has no
control over the price since the products are homogeneous this will earn zero economic profit in
a long run.

 If the company can't choose the price, what will the company do to maximize profit?

As a rule, marginal revenue is equals to marginal cost also known as the Profit Maximation.
In Perfect Competition the firm cannot choose or does not have control over the price but they
can choose how much output to produce. It needs to choose output that has a profit maximation.
Since they have the same prices, each unite that will be sold generates additional revenue
therefore marginal revenue is equal to the equilibrium price

2. What keeps other firms from entering a monopoly market? Do all monopolists get a guaranteed
profit?

Monopoly market has only 1 seller of homogeneous product or service. They do not need to
be advertised and can be a price dictator. The other firms keep on entering a monopoly market since
they are the only producers thus, they do not need to compete with others. The demand reflects the
buyer’s willingness to pay. The barriers protect the monopolist profit from the competitors. It does not
guaranteed profit in all monopolist, in an instance that the cost per unit exceeds the price it results to
lose.

3. Why do we call it a monopolistic competition where there are many sellers?  Why are profits
driven to zero in the long run?

Monopolistic Competition sometimes as a monopolist they play with the branding, loyalty,
uniqueness and more. In this type of competition advertisement is a must to make the product
dominant with others. With the differentiation of products gives the firm a little control over the price
that the firms want. But in a long run the profit are driven to zero because the firm has a barrier like the
perfect competition to entry to protect its profits that can sustain those profits.

4. Have you ever applied the game theory in decision making?

Yes, since my phone is broken my mother promised me to buy a new phone but her birthday will be on
next month so we need to save for her celebration though it will be finance by my eldest sister she still
worries about the other expenses. I already chose a brand and the version of phone I want to buy last
week but I was thinking that if we will buy it on December or maybe after her birthday, I can ask for a
latest version of the phone that I want.