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Topic: Business
Number of pages / Number of words: 5 / 1339
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The graph above illustrates the activities of an individual firm – in this case a real estate agency – in relation to an increase in price. The increased price is taken and quantity increases from Q1 to Q2. If the new price is above the SRATV then firms will go from making normal economic profit to an economic profit...


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The increased price is taken and quantity increases from Q1 to Q2. If the new price is above the SRATV then firms will go from making normal economic profit to an economic profit.

Graph 3 constructs the effect on the industry as a whole, when prices increase. The demand in the industry increases equilibrium price and firms earn above normal economic profit, thus attracting more businesses into the industry...


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