A number of stores offer film developing as a service to their customers. Suppose that each store
Question:
a) If the going rate for developing a roll of film is $8.50, is the industry in long-run equilibrium? If not, find the price associated with long-run equilibrium.
b) Suppose now that a new technology is developed which will reduce the cost of film developing by 25%. Assuming that the industry is in long-run equilibrium, how much would any one store be willing to pay to purchase this new technology?
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a Each firms profitmaximizing quantity is where price equals marginal cost 850 05 016q Thus q 50 Pro...View the full answer
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