Compare price, output and profits in the short run versus the long run for a competitive market?

Question

Compare price, output and profits in the short run versus the long run for a competitive market assuming there is a positive economic profit in the short run. Then assume your own business is a competitive market and discuss its profits (or losses) in the short run versus the long run.

Answer 1

Price, output, and profits will all be higher in the short run.  In the long run, however, more firms enter the market and price and output per firm fall.  Profits will become zero, because firms will enter up to the point where the next firm will not earn any profit.

Answer 2

Y=PQ   value of global output

P=Price

Q=Quantity

Q=Q(1)+Q(2)+.......+Q(n)  

c(Q) is the function cost

Benefit=PQ-c(Q)

we have to assume that dB/dQ>0 in the short run

dB/dQ=P-dc(Q)/dQ>0

P=Price

MC=Marginal cost

P>MC

Price is greater than the marginal cost

When all producers  maximize profits dB/dQ=0 and then

P=dc(Q)/dQ=MC

and price equals the marginal cost