Suppose that each of the following is true: (1) The laptop computer industry is perfectly competitive and

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Suppose that each of the following is true: (1) The laptop computer industry is perfectly competitive and that the firms that assemble laptops do not also make the displays, or screens; (2) the laptop display industry is also perfectly competitive; and (3) because the demand for laptop displays is currently relatively small, firms in the laptop display industry have not been able to take advantage of all the economies of scale in laptop display production. Use a graph of the laptop computer market to illustrate the long-run effects on equilibrium price and quantity in the laptop computer market of a substantial and sustained increase in the demand for laptop computers. Use another graph to show the effect on the cost curves of a typical firm in the laptop computer industry. Briefly explain your graphs. Do your graphs indicate that the laptop computer industry is a constant-cost industry, an increasing-cost industry, or a decreasing-cost industry?
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Microeconomics

ISBN: 9780135952955

8th Edition

Authors: Glenn Hubbard, Anthony Patrick O Brien

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