In August 2008, Ethan Nicholas developed the iShoot application for the Apple iPhone 3G, and within five months had earned $800,000 from this program.By May 2009, Nicholas had dropped the price from $4.99 to $1.99 in an attempt to maintain sales.This example indicates that in a competitive market

Question

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The fact that Nicholas had to drop the price of the application after just five months suggests that competition in the market was increasing and demand was becoming more price-sensitive. This indicates that maintaining economic profits in the long run can be difficult as competitors enter the market and drive prices down.

In August 2008, Ethan Nicholas Developed the IShoot Application for the Apple