Problem

Suppose the book-printing industry is competitive and begins in a long-run equilibrium....

Suppose the book-printing industry is competitive and begins in a long-run equilibrium.

a. Draw a diagram describing the typical firm in the industry.

b. Hi-Tech Printing Company invents a new process that sharply reduces the cost of printing books. What happens to Hi-Tech's profits and the price of books in the short run when Hi-Tech's patent prevents other firms from using the new technology?

c. What happens in the long run when the patent expires and other firms are free to use the technology?

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Solutions For Problems in Chapter 14