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Suppose firms are earning profits in the Airline Industry with no restrictions to the entry of new airline companies. Now, suppose many new firms enter
Suppose firms are earning profits in the Airline Industry with no restrictions to the entry of new airline companies. Now, suppose many new firms enter the airline industry because of profit motives.
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a) What would happen to the market equilibrium price for airline tickets. Explain.
b) Will the new entry result in the decline of profits of the airline industry. If yes, explain. If no, explain.
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