If new firms are expected to enter an existing market, the profits of all firms
ID: 1218913 • Letter: I
Question
If new firms are expected to enter an existing market, the profits of all firms are likely to increase the market demand is likely to increase the market supply is likely to fall the market price is likely to fall The reservation value of a buyer reflects her. total income total utility from a good or service willingness to pay for a good or service trade-off between buying various goods and services The reservation value of a seller reflects her. marginal cost total cost marginal revenue willingness to pay for using a resourceExplanation / Answer
10. If new firms are expected to enter an existing market
The market price is likely to fall.
If the firms expected to enter an existing market then the market price is likely to fall because firms are competing each other like price war. Then at the some point firms are decreases the price of the good to increase the demand.
11. The reservation value of a buyer reflects her.
Willingness to pay for a good or service.
It is the maximum value the buyer is willing to pay in order to buy a good.
12. The reservation value of a seller reflects her
Total cost.
It is the minimum value the seller is willing to accept in order to sell a good.
The minimum price a producer is willing to accept to sell a good is an approximation for the total cost to the producer of making the good.
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