1.

Supposethe price at which the equilibrium is attained in exercise 5 is abovethe minimum average cost of the firms constituting the market. Now ifwe allow for free entry and exit of firms, how will the market priceadjust to it?

Answer»

Suppose
the price at which the equilibrium is attained in exercise 5 is above
the minimum average cost of the firms constituting the market. Now if
we allow for free entry and exit of firms, how will the market price
adjust to it?



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