Question

Competition from Amazon and other online booksellers has resulted in some brick-and-mortar bookstores suffering losses. According to an article in the New York Times, over the past 15 years, the number of bookstores in the borough of Manhattan in New York City has declined by 30 percent.

Draw a graph showing the effect on a remaining bookstore of the exit of many competitors from this industry. Be sure that your graph includes the bookstore's demand, marginal revenue, marginal cost, and average total cost curves. Your graph should show changes in any of the curves. It should also show any changes in the area representing the store's economic profit (or loss). Be sure to explain any assumptions you are making.

Answer 1

Check the explanation

Step-by-step explanation:

As some bookstores exit the market, the demand curve faced by a remaining bookstore will shift to the right. The demand curve may also become less elastic because consumers will have fewer other stores to buy from. After the exit of the competing stores, this store is expected to break even.

Explanation - since some firms have left the Market so fewer firms will be left the demand will become less elastic because of the less options available to the consumers