At a ski resort located over one hour from the nearest large town, there is only one grocery store and it charges prices more than 200% percent above the typical retail prices. In the long run, we would expect that:
A) another store will open that will charge equally high prices since competition is low.
B) the store will continue to earn high profits even in the long run since the size of the market is small.
C) demand will decrease since people will not want to pay the high prices.
D) another store will open that will charge lower prices.

Question

Quizplus · Accepted Answer

In the long run, high prices and profits attract new entrants to the market. Another store may open to offer lower prices, increasing competition and driving prices down.

At a Ski Resort Located Over One Hour from the Nearest