Draw a diagram for a perfectly competitive industry with firms earning normal profits in the long run. Assume that all firms in the industry use oil as key inputs. Using an appropriate diagram, illustrate an increase in the price of inputs. Will firmlevel profits increase or decrease and will market supply increase or decrease?
Draw a diagram for a perfectly competitive industry with firms earning normal profits in the long run. Assume that all firms in the industry use oil as key inputs. Using an appropriate diagram, illustrate an increase in the price of inputs. Will firmlevel profits increase or decrease and will market supply increase or decrease?
Chapter9: Perfect Competition
Section: Chapter Questions
Problem 10WNG
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Draw a diagram for a
profits in the long run. Assume that all firms in the industry use oil as key inputs.
Using an appropriate diagram, illustrate an increase in the
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