Biwei decides to set up a small business in NYC. The start-up cost is $1000 for a license and theestimated direct cost is $4 per output. - What would be the market competition effect of Sonia’s entry on Biwei’s business? Would itreduce Biwei’s cost? Would it reduce Biwei’s revenue? Would it reduce Biwei’s profit? Explain.

Economics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506725
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Chapter24: Price-searcher Markets With High Entry Barriers
Section: Chapter Questions
Problem 13CQ
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Biwei decides to set up a small business in NYC. The start-up cost is $1000 for a license and the
estimated direct cost is $4 per output.

- What would be the market competition effect of Sonia’s entry on Biwei’s business? Would it
reduce Biwei’s cost? Would it reduce Biwei’s revenue? Would it reduce Biwei’s profit? Explain.

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