Managerial Econmics

posted by .

Suppose you own a home remodeling company. You are currently earning short- run profits. The home remodeling industry is an increasing- cost industry. In the long run, what do you expect will happen to …
a. …your firm’s costs of production? Explain.
b. …the price you can charge for your remodeling services? Why?
c. …profits in home remodeling? Why?

  • Managerial Econmics -

    for b i have 2 possible answers
    Prices are dependent on marginal costs, therefore prices will also increase.
    or is it that
    The price charged will decrease since with short-run profits, more companies enter the market to compete and the extra competition drives prices down.

Respond to this Question

First Name
School Subject
Your Answer

Similar Questions

  1. Microeconomics

    Suppose rampant fears of Mad Cow disease cause a decrease in demand for beef. What will be the short-run effects of the declining demand for beef on the firm and the market?
  2. economics

    This is going to be really long, but I want to see if my answers are correct. This is problem number 10.10 in my Intermediate Microeconomics book. A perfectly competitive painted necktie industry has a large number of potential entrants. …
  3. Micreoeconomics

    1. Assume a perfectly competitive constant cost industry, currently in long-run equilibrium. Market demand in the industry is given by Q = 1500 - 25P. The short-run market supply curve is given by: Q = 15P - 100 for P B 10 = 0 for …
  4. Economics

    Suppose you own a home remodeling company. You are currently earning short-run profits. The home remodeling industry is an increasing-cost industry. In the long run, what do you expect will happen to a. Your firm's costs of production?
  5. microeconomics

    The short-run cost curve for each firm's long run equilibrium output is C=y^2-20y+400. Calculate the short-run average and marginal cost curves. At what output level does short-run average cost reach a minimum?
  6. Economics

    The handmade snuffbox industry is composed of 100 identical firms, each having short – run total costs given by STC = 0.5q2 + 10q + 5 and short – run marginal costs by SMC = q + 10 where q is the output of snuffboxes per day. a) …
  7. Economics

    If all company in a certain industry are earning economic profits now, in long run what will happen?
  8. Microeconomics

    A perfectly competitive industry has a large number of potential entrants. Each firm has an identical cost structure such that long run average cost is minimized at an output of 10 units (qi=10 ). The minimum average cost is R5 per …
  9. Economics

    A perfectly competitive painted necktie industry has a large number of potential entrants. Each firm has an identical cost structure such that long-run average cost is minimized at an output of 20 units . The minimum average cost is …
  10. Economics

    A perfectly competitive painted necktie industry has a large number of potential entrants. Each firm has an identical cost structure such that long-run average cost is minimized at an output of 20 units . The minimum average cost is …

More Similar Questions