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Spyraplast Inc. is a monopolistically competitive firm that manufactures and sells low cost plastic tools to the space exploration industry. In recent months, the industry
Spyraplast Inc. is a monopolistically competitive firm that manufactures and sells low cost plastic tools to the space exploration industry. In recent months, the industry has experienced negative demand shocks which have caused many firms to become unprofitable. Below is a graph of the demand and cost curves for Spyraplast Inc. which show that the firm is losing money. Assume that Spyraplast Inc. has enough reserves to sustain it through this unfavorable period. Other companies are not so lucky. As competing firms begin to exit the medical plastic industry, illustrate what will happen to Spyraplast Inc. by shifting the demand curve for its products in the appropriate direction
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