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Question: Lorie teaches singing. Her fixed costs are $1,000 a month, and it costs her $50 of labour to give one class. The table shows the demand schedule for Lorie's singing lessons.
a. Do you expect other firms to enter the singing lesson business and compete with Lorie?
b. What happens to the demand for Lorie's lessons in the long run? What happens to Lorie's economic profit in the long run? Use the figure in the next column, which shows the situation facing Mike's Bikes, a producer of mountain bikes, to work Problems 14 to 18. The demand and costs of other mountain bike producers are similar to those of Mike's Bikes.
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