Please help me solve this problem...long-run effects
Your firm sells a very popular children's game. As the manager, you have received information that another firm is thinking about introducing a similar game. You have the following facts:
Your average cost of production is constant at $20.
At the current monopoly price of $50, you sell 120 games per month.
You could prevent the entry of the second firm by increasing your output to 150 games per month and cutting the price to $40.
If the second firm enters the market, your price would decrease to $30 and you would sell only 80 games per month.
Should you prevent the entry of the second firm? Facts and figures.