Week2 - Discussion 1 Perfect Competition(graded Below is a...

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Discussion: 1 Perfect Competition (graded) Below is a recommended topic for this discussion. If your instructor chooses a different “Making the Connection” from this weeks’ readings or another alternate discussion topic, his or her chosen topic and any required work in MyEconLab or elsewhere will be in the instructors’ first posting. Read the Making the Connection short case titled In the Apple iPhone Apps Store, Easy Entry Makes the Long Run Pretty Short in Chapter 12 of our textbook, and also be sure to watch the video right under the Making the Connection title (maybe a few times). Then post your first posting this week beginning to discuss what you’ve read and watched in the video. Then work on Problems and Applications 5.9, at the end of Chapter 12, answering and discussing the questions in that exercise. Making the Connection: In the Apple iPhone Apps Store, Easy Entry Makes the Long Run Pretty Short My Econ Lab Video Throughout the economy, entrepreneurs are continually introducing new products or new ways of selling products, which—when successful—enable them to earn economic profits in the short run. But in the long run, competition among firms forces prices to the level where they just cover the costs of production. This process of competition is at the heart of the market system and is the focus of this topic. As we have seen, when firms earn economic profits in a market, other firms have a strong economic incentive to enter that market. This is exactly what happened with iPhone apps, and by April 2009, more than 25,000 apps were available in the iTunes store. The cost of entering this market was very small. Anyone with the programming skills and the available time could write an app and have it posted in the store. As a result of this enhanced competition, the ability to get rich quick with a killer app was quickly fading. As an article in the New York Times put it: “The chances of hitting the iPhone jackpot keep getting slimmer: the Apple store is already crowded with look-alike games ... and fresh inventory keeps arriving daily. Many of the simple but clever concepts that sell briskly ... are already taken.”
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In a competitive market, earning an economic profit in the long run is extremely difficult. And
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