Turn on thread page Beta
    • Thread Starter
    Offline

    0
    ReputationRep:
    I just need help understanding what the question actually means:

    Consider an Industry where new firms (entrants) have permanently higher costs than existing firms (incumbents). For example, agriculture, since all the best land will be taken first, and so a new farm will be on worse land than existing farms and its costs higher. Outline the effect of a shift out in the demand curve for the good (due to a rise in price of a substitute for example) on existing firms' supply in the short-run, when new firms will enter. Illustrate the level of supernormal profits of existing and new firms and the industry's cost and supply curve in the long-run.

    If anyone can shed any light on this it'd be much appreciated =)
 
 
 
Reply
Submit reply
Turn on thread page Beta
Updated: November 17, 2008
Poll
Cats or dogs?

The Student Room, Get Revising and Marked by Teachers are trading names of The Student Room Group Ltd.

Register Number: 04666380 (England and Wales), VAT No. 806 8067 22 Registered Office: International House, Queens Road, Brighton, BN1 3XE

Write a reply...
Reply
Hide
Reputation gems: You get these gems as you gain rep from other members for making good contributions and giving helpful advice.