Graph 17-4

-Refer to Graph 17-4. Which of the markets depicted in each panel is likely to see a firm enter in the long run?

Question

Graph 17-4
 
-Refer to Graph 17-4. Which of the markets depicted in each panel is likely to see a firm enter in the long run?

Quizplus · Accepted Answer

Panel C and D show a market that is initially uneconomical, but in the long run, the market's equilibrium price will increase enough to attract new firms to enter. In panels A and B, the market is already at equilibrium, and in panel A, the market is already saturated with firms, so there is no room for new ones to enter without significant differentiation.

Graph 17-4 -Refer to Graph 17-4. Which of the Markets Depicted in the Markets