1. Bagel restaurant is likely to be a constant industry because it is in the perfect competition industry. Bagel restaurant is in the perfect competition industry because there are few entry barriers in this industry. Anyone could enter this industry. In the short-run, existing firms might get profit just as the case of George’s bagel chain. However, in the long-run, the profit attracts new competitors into this industry, causing price competition. Because each firm will produce at the point where P=LRMC, the price competition will force each firm to produce at the lowest point of the LRAC curve.
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