Why do most cities in North America now have more radios but fewer radio repair

Question

Why do most cities in North America now have more radios but fewer radio repair shops than they did in 1960? LO2 How can a business owner who earns $10 million/year from his or her business credibly claim to earn zero economic profit? LO1 Why do market forces drive economic profit but not economic rent toward zero? LO6 Is it possible for the short-run market supply curve to show that quantity supplied increases only if price increases and for the long-run market supply curve to indicate that market price does not increase as quantity supplied increases? Why or why not? LO3

Explanation / Answer

ans 2 ) Any producer/business will earn super normal profit or abnormal profit when they are a single producer or supplier in the market.This can also happen when they act as monopolist and charge a higher price i.e. P>MC to cover their cosst.But in this case the businessman has continously earned $10m which means that he/she are in a constant revenue situation and there sales have remained same .Due to this they are claiming to earn zero economic profit because there is free entry of firms and there are more firms competing in the market.

ans 4 ) Yes , short run supply curve is increasing as the firms can earn more by selling at high price but later the marginal cost will start rising and the fiirms may not be able to cover it with the same price.However the long run market supply curve is made by summation of all short run supply curve but the supply can increase without raising price because more firms enter the market due to which the supply rises.

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