Microeconomics 6th Edition by Robert Hall, Shirley Kuiper, Marc Lieberman

Exercise 8

In recent years,Web sites such as zillow.com have made it easier for home sellers to figure out what price to charge for their home-one of the tasks that real estate agents perform for sellers. And a variety of other Web sites enable home buyers and sellers to find each other without using an agent at all. Suppose these new technologies catch on with half of the home sellers in an area,while the other half continues to prefer selling with an agent. Assume that home prices and the commission rate stay unchanged. Before accounting for entry or exit of agents:
a. Describe what would happen to a typical agent's ATC and MC curves.
b. What would happen to the number of homes sold by a typical agent?
c. What would happen to the economic profit of a typical agent?
Now take account of entry or exit of agents in response to the new technologies available for home selling. Compared to the results you found above,how will entry or exit affect:
d. A typical agent's ATC and MC curves?
e. The economic profit of the typical agent?
f. The number of homes sold by a typical agent?