Explain equilibrium profit of the incumbent will fall


Consider the market for a good with a fixed demand curve (that is, the demand curve does not change), an incumbent firm (Firm 1) and a potential entrant (Firm 2). Both firms have the same cost curve. If the fixed cost of production increases, then the equilibrium profit of the incumbent will fall. Discuss.

Request for Solution File

Ask an Expert for Answer!!
Microeconomics: Explain equilibrium profit of the incumbent will fall
Reference No:- TGS072277

Expected delivery within 24 Hours