Emboldened by Apple's success with its iPhone, many PC makers and chip companies are charging into the mobile-phone business, promising new devices that can pack the horsepower of standard computers into palm-size packages- devices that handle the full glory of the Internet, power two-way video conferences, and stream high-definition movies to your TV. It is a development that spells serious competition for established cell-phone makers and phone companies.
a. Draw a graph of the cost curves and revenue curves of a cell-phone company that makes a positive economic profit in the short run.
b. If cell-phone companies start to include the popular features introduced by PC makers, explain how this decision will affect their profit in the short run.
c. What do you expect to happen to the cellphone company's economic profit in the long run, given the information in the news clip?
d. Draw a graph to illustrate your answer to part (c).