3. Entry and exit in the long run Suppose that bike manufacturers in a competitive price-searcher market earn negative profits in the short run. In this scenario, there manufacturers in the industry than there would be in long-run equilibrium. Now consider the long run in which bike manufacturers are free to enter and exit the market. The following graph shows the demand curve in the market for bikes. Considering the situation just described, shift the demand curve on the graph to show how the demand curve facing an individual firm in the industry would change in the long run. Firm's Demand Curve Firm's Demand Curve QUANTITY (Bikes) PRICE (Dollars per bike)

3. Entry and exit in the long run Suppose that bike manufacturers in a competitive price-searcher market earn negative profits in the short run. In this scenario, there manufacturers in the industry than there would be in long-run equilibrium. Now consider the long run in which bike manufacturers are free to enter and exit the market. The following graph shows the demand curve in the market for bikes. Considering the situation just described, shift the demand curve on the graph to show how the demand curve facing an individual firm in the industry would change in the long run. Firm's Demand Curve Firm's Demand Curve QUANTITY (Bikes) PRICE (Dollars per bike)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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