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microbook_3e-page119 - o will over time tend to favor those...

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Long-Run Adjustment Mechanism The central idea behind the discussion of entry, exit, expansion and contraction is: x In efficient markets, investment capital flows toward profit opportunities. x Investment – in the form of new firms and expanding old firms
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Unformatted text preview: o will over time tend to favor those industries in which profits are being made, o and over time industries in which firms are suffering losses will gradually contract from disinvestment. Page 119...
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