a. Your mate, whose business is operating in the long-run, told you that he would keep running his business because he is making a normal profit.Graphically represent normal profit and explain why your mate is still in his business.

b. Why is a perfectly competitive market structure very unlikely to exist in the real world?

c. Assume you are the owner of one of the only two coffee shop in town.Draw the game theory matrix and explain the strategy the coffee shops will use to maximise their payoff, if they were in competition with each other.Is this strategy optimum?

Use the game theory matrix diagram to illustrate and explain a strategic decision you have made recently.