Suppose that the tricorder industry is perfectly competitive. The firm of JL Picard is making a short-term economic profit. The firm of WT Riker decides to enter the tricorder industry. However, when the WT Riker firm enters the industry, it bids up some input prices. For this industry, we will likely observe a(n):

Question

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When WT Riker enters the industry and bids up input prices, it raises the cost of production for all firms in the industry. Therefore, firms will start to exit the industry in the long run as their short-term economic profits disappear. As the number of firms decreases, the market supply curve will slope upward, indicating that higher prices are necessary to induce the remaining firms to produce the same quantity.

Suppose That the Tricorder Industry Is Perfectly Competitive