How do you explain the decrease in the number of manufacture

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1. Why do firms enter an industry when they know that in the long run economic profit will be zero?

2. At the beginning of the twentieth century, there were many small American automobile manufacturers. At the end of the century, there were only three large ones. Suppose that this situation is not the result of lax federal enforcement of antimonopoly laws. How do you explain the decrease in the number of manufacturers?

(Hint: What is the inherent cost structure of the automobile industry?)

Reference no: EM13321641

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