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Consider a perfectly competitive industry composed of firms employing only the labor of their owners as inputs. Let this industry face a downward-sloping demand curve,
Consider a perfectly competitive industry composed of firms employing only the labor of their owners as inputs. Let this industry face a downward-sloping demand curve, and let the output price exceed the personal opportunity cost of the labor required to produce the marginal unit of output by the typical firm owner. What should the expected movement of price and market output be in the long run?
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