Firm average cost of production

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Reference no: EM132288528

Suppose that you own a home remodeling company. You are currently earning short-run profits. (Hint: If this is a perfectly competitive industry, what happens in the long run to the number of firms?) Assume that the home remodeling industry is an increasing-cost industry. In the long-run, what do you expect to happen to:

  • Your firm's average cost of production? Why?

Increasing cost Industry =  Average cost of production will rise in the long run.

  • The price you can charge for your remodeling service?Why?

The price also rises, as average cost of prod increases.

  • Profits in the home remodeling industry? Why?

Profit falls,

Reference no: EM132288528

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