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In a Small University Town, Four Micro-Breweries Have Opened in the Last

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In a small university town, four micro-breweries have opened in the last two years.Demonstrate the effect of these new market entrants on demand for incumbent firms (micro-breweries) that already served this market.Assume that the local community now places a moratorium on new liquor licenses for micro-breweries.How will this moratorium affect the long-run profitability of incumbent firms?


Definitions:

President Hayes

Rutherford B. Hayes, the 19th President of the United States, best known for ending the Reconstruction era through the Compromise of 1877.

Westward Expansion

The 19th-century movement of settlers, agriculture, and industry into the American West, often leading to the displacement of Indigenous peoples.

Transcontinental Railroad

A railway system completed in 1869 that connected the eastern and western parts of the United States, significantly reducing travel time and facilitating economic growth.

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