Answered: 6. A large number of new estate agents…

6. A large number of new estate agents (with the same technology as existing firms) enter the market. What is the effect on output, price, and profits in the short-run? How about the long-run?

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter5: Investment Decisions: Look Ahead And Reason Back

Section: Chapter Questions

Problem 5.6IP

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Question

Q6 Please help me solve this question so I can compare it to my awnser, question 6 Thank you

C: Disruptive technology
Estate agents help sellers advertise their home for sale to potential buyers. At present, estate agents
operate in a perfectly competitive market, at LR equilibrium.
6. A large number of new estate agents (with the same technology as existing firms) enter the
market. What is the effect on output, price, and profits in the short-run? How about the
long-run?
7. A well-known internet company (WKIC) quietly launches an internet service in which people
can find houses. The WKIC has considerably lower average costs than traditional estate
agents. What is the effect on output, price, and profits in the short-run? How about the
long-run? (Assume that the offering of the WKIC can be duplicated.)

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