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QUESTION

How Many Book Stores?

How Many Book Stores? The city of Bookburg initially allows one book store, which sells books at a price of $20 and an average cost of $11. Suppose the city eliminates its restrictions on books stores, allowing additional stores to enter the market. According to an expert in the music market, “Each additional music store will decrease the price of books by $2 per book and increase the average cost of selling books by $1 per book.” Predict the equilibrium number of books stores.

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