Suppose the market for tattoo shops in Reno is monopolistically competitive. Suppose that the wages of tattoo artists fall, shifting down the average cost curve for tattoo shops. Explain, either in words, using a graph, or both, why either of the following are possible: a. The prices charged by existing shops goes up in the long run. b. The prices charged by existing shops goes down in the long run.

Suppose the market for tattoo shops in Reno is monopolistically competitive. Suppose that the wages of tattoo artists fall, shifting down the average cost curve for tattoo shops. Explain, either in words, using a graph, or both, why either of the following are possible: a. The prices charged by existing shops goes up in the long run. b. The prices charged by existing shops goes down in the long run.

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter14: Monopolistic Competition And Product Differentiation

Section: Chapter Questions

Problem 6P

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