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lectur6-page23 - Unrestricted Markets Economic profit...

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23 23 Unrestricted Markets Economic profit earned New firms will enter the industry. What would you do if you were an agricultural producer and your neighbor was producing cotton and making money hand over fist? You have never planted cotton. Your neighbor is building a new house, has a new Ford crew cab and a Ford Expedition parked in front of the old house. Your neighbor just bought a new pontoon party barge to go along with that 18 foot Skeeter bass boat. The neighbor’s kids are racing around the farm with three new Honda four wheelers with the new push button gear changer. And, to top it all off, your neighbor’s whole family is going on one of those cruise ships to all of those islands in the Caribbean for December holidays! Now, what are you thinking? You want some or all of that don’t you? How are you going to get it? Well, you freely enter the cotton market (unrestricted market) and start planting cotton. Are you the only producer that has noticed the economic profits earned by your neighbor. Probably not, so now there are more and
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This note was uploaded on 12/29/2011 for the course ECO 210 taught by Professor Malls during the Fall '10 term at SUNY Stony Brook.

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