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wrote...
Posts: 184
4 weeks ago

Figure 9.5


Figure 9.5 shows the short-run and long-run effects of an increase in demand of an industry with increasing cost. The market is in equilibrium at point A, where 100 identical firms produce 6 units of a product per hour. If the market demand curve shifts to the right, what will happen to an individual firm's profit?

▸ Each firm earns a positive profit at point B.

▸ The profit of each firm decreases as more firms enter the market and share the benefits of an increase in demand pushing the market from point A to point B.

▸ Each firm earns a zero profit at point B because the market is perfectly competitive.

▸ none of the above
Textbook 
Microeconomics: Principles, Applications, and Tools
Edition: 8th
Authors:
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wrote...
Posts: 243
4 weeks ago
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Each firm earns a positive profit at point B.
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wrote...
4 weeks ago
Appreciate the effort, thank you!
wrote...
4 weeks ago
You're very welcome ... please mark the topic solved when you get a chance
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