# How will this affect the equilibrium?

Consider the case of a perfectly competitive industry where one or more groups of the competitors Show more Consider the case of a perfectly competitive industry where one or more groups of the competitors attempts to expel another group by boycotting. a) Suppose group B (with supply = ?MCB) is again attempting to expel group A (with supply = ?MCA). Instead of being successful it is only able to drive half of the group B firms out of the market. What is the resulting new equilibrium (draw a graph) in terms of price and quantity? By how much (graphically) does group B benefit? b) Suppose that instead of two groups there are three groups in the industry now. Label the third group C with a supply equal to ?MCc. Now suppose the group B tries to drive both other groups out of the market but only successfully gets group A to leave through boycotting. What is the resulting new equilibrium (draw a graph) in terms of price and quantity? By how much (graphically) does group B benefit? c) Continuing from the analysis in Part B (so group A is gone) suppose that in attempting to drive the other groups out of the market group B is unable to avoid an increase in its costs. How will this affect the equilibrium? Is it clear whether group B is still better off? Show less
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