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Analyzing behavior of Increasing cost industry

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Suppose you own a remodeling company. You are currently earning short-run profits. The home remodeling industry is an increasing cost industry. In the long run, what do you expect will happen to:

a. Your firm's costs of production? Explain.
b. The price you can charge for your remodeling services? Why?
c. Profits in home remodeling? Why?

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The expert analyzes behavior of increasing cost industry.

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a. Your firm's costs of production? Explain.

As firm is making short-run profits, new firms will enter into the market. Demand for input factors will increase. So, inputs will become ...

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  • BEng (Hons) , Birla Institute of Technology and Science, India
  • MSc (Hons) , Birla Institute of Technology and Science, India
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