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2012.04.30 - ECON1101, Week 9 Lecture Notes

9 19 invisible hand at work figure 910 economic

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Unformatted text preview: in the short run (b). 9-19 INVISIBLE HAND AT WORK Figure 9.10 Economic profit and loss in the short run The assumed demand shifts result in an economic loss for the representative film processor (a) and an economic profit for the representative personal trainer (b). 9-20 THE IMPORTANCE OF FREE ENTRY AND EXIT !  Barriers to entry Any force that prevents firms from entering a new market !  Copyright laws !  Product compatibility in the software market 9-21 ECONOMIC RENT VS. ECONOMIC PROFIT !  Economic rent That part of the payment for a factor of production that exceeds the owner’s reservation price !  Unlike economic profit, which is driven towards zero by competition, economic rent may persist for extended periods 9-22 INV...
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