Effect of barriers to entry to attain the long run profit.

Question

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Answer 1

Question

Chapter 24, Problem 1CQ

To determine

Effect of barriers to entry to attain the long run profit.

Expert Solution & Answer

Explanation of Solution

Barriers to entry are crucial for the existence of long run profit. It is because a firm can make profit in the short run. However, if there are no barriers to entry, other firms will enter into the market to capture the profit and they increase the supply of products. The price will decrease due to the increase in the supply. This will result in the elimination of the profit in the market and it becomes a zero profit in the long run. However, the long run profit is not solely on the barriers to entry. It is also based on the demand for a particular good.

Economics Concept Introduction

Barriers to entry: Creating the obstacles like high startup cost and other barriers to prevent the entrance of new firm in the market.

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Answer

M” method Given the following model, solve by the method of “M”. (see image)

Answer 2

Question

Chapter 24, Problem 1CQ

To determine

Effect of barriers to entry to attain the long run profit.

Expert Solution & Answer

Explanation of Solution

Barriers to entry are crucial for the existence of long run profit. It is because a firm can make profit in the short run. However, if there are no barriers to entry, other firms will enter into the market to capture the profit and they increase the supply of products. The price will decrease due to the increase in the supply. This will result in the elimination of the profit in the market and it becomes a zero profit in the long run. However, the long run profit is not solely on the barriers to entry. It is also based on the demand for a particular good.

Economics Concept Introduction

Barriers to entry: Creating the obstacles like high startup cost and other barriers to prevent the entrance of new firm in the market.

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Answer 3

Question

Chapter 24, Problem 1CQ

To determine

Effect of barriers to entry to attain the long run profit.

Expert Solution & Answer

Explanation of Solution

Barriers to entry are crucial for the existence of long run profit. It is because a firm can make profit in the short run. However, if there are no barriers to entry, other firms will enter into the market to capture the profit and they increase the supply of products. The price will decrease due to the increase in the supply. This will result in the elimination of the profit in the market and it becomes a zero profit in the long run. However, the long run profit is not solely on the barriers to entry. It is also based on the demand for a particular good.

Economics Concept Introduction

Barriers to entry: Creating the obstacles like high startup cost and other barriers to prevent the entrance of new firm in the market.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 24, Problem 1CQ

To determine

Effect of barriers to entry to attain the long run profit.

Expert Solution & Answer

Explanation of Solution

Barriers to entry are crucial for the existence of long run profit. It is because a firm can make profit in the short run. However, if there are no barriers to entry, other firms will enter into the market to capture the profit and they increase the supply of products. The price will decrease due to the increase in the supply. This will result in the elimination of the profit in the market and it becomes a zero profit in the long run. However, the long run profit is not solely on the barriers to entry. It is also based on the demand for a particular good.

Economics Concept Introduction

Barriers to entry: Creating the obstacles like high startup cost and other barriers to prevent the entrance of new firm in the market.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 24, Problem 1CQ

To determine

Effect of barriers to entry to attain the long run profit.

Expert Solution & Answer

Explanation of Solution

Barriers to entry are crucial for the existence of long run profit. It is because a firm can make profit in the short run. However, if there are no barriers to entry, other firms will enter into the market to capture the profit and they increase the supply of products. The price will decrease due to the increase in the supply. This will result in the elimination of the profit in the market and it becomes a zero profit in the long run. However, the long run profit is not solely on the barriers to entry. It is also based on the demand for a particular good.

Economics Concept Introduction

Barriers to entry: Creating the obstacles like high startup cost and other barriers to prevent the entrance of new firm in the market.

Answer 6

Chapter 24, Problem 1CQ

To determine

Effect of barriers to entry to attain the long run profit.

Expert Solution & Answer

Explanation of Solution

Barriers to entry are crucial for the existence of long run profit. It is because a firm can make profit in the short run. However, if there are no barriers to entry, other firms will enter into the market to capture the profit and they increase the supply of products. The price will decrease due to the increase in the supply. This will result in the elimination of the profit in the market and it becomes a zero profit in the long run. However, the long run profit is not solely on the barriers to entry. It is also based on the demand for a particular good.

Economics Concept Introduction

Barriers to entry: Creating the obstacles like high startup cost and other barriers to prevent the entrance of new firm in the market.

Answer 7

Chapter 24, Problem 1CQ

To determine

Effect of barriers to entry to attain the long run profit.

Answer 8

Expert Solution & Answer

Explanation of Solution

Barriers to entry are crucial for the existence of long run profit. It is because a firm can make profit in the short run. However, if there are no barriers to entry, other firms will enter into the market to capture the profit and they increase the supply of products. The price will decrease due to the increase in the supply. This will result in the elimination of the profit in the market and it becomes a zero profit in the long run. However, the long run profit is not solely on the barriers to entry. It is also based on the demand for a particular good.