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ABC Nails Company is a monopolistically competitive firm which specializes in the production of cosmetology products. It has recently experienced a decline in profitability as
ABC Nails Company is a monopolistically competitive firm which specializes in the production of cosmetology products. It has recently experienced a decline in profitability as the industry has become saturated with many firms offering similar products. The graph below shows the firm's demand curve and cost curves, illustrating that it is currently losing money. Illustrate what will happen as this industry begins to transition to the long-run by shifting the demand curve for ABC Nails Company's products in the appropriate direction. Assume that ABC Nails Company has enough reserves to sustain it through this difficult time and will not exit the industry, unlike some of its competitors
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