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)
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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