Long run Normal Profits

Long run Normal Profits - differentiate their products....

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Long run Normal Profits: When a firm has differentiated its product successfully it earns extra profits by selling more output and charging a higher price. These profits may not continue in the long run. The reason is: when one firm makes extra profits other firms are also induced to
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Unformatted text preview: differentiate their products. Moreover, outside firms will also start entering the market. Such reactions on the part of the rivals cause a firms demand curve dd to slide downwards as d1d1in Figure 51....
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