Suppose that the figure below represents coffee shop owners in Alsancak. The downward sloping line in the graph below gives the markup that maximizes the coffee shops' profits, for a given number of...

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Extracted text: Suppose that the figure below represents coffee shop owners in Alsancak. The downward sloping line in the graph below gives the markup that maximizes the coffee shops' profits, for a given number of firms. The number of firms is constant and equal to 50 at the equilibrium markup, p*. Markup, µ Equilibrium markup, u 50 Number of coffee shops, n a. Why do you think that the number of coffee shops at X is not sustainable (i.e. the number of firms will change) Explain your answer? b. What will happen to long-run equilibrium markup (u) in Alsancak if the expected profits of coffee shops in other districts (e.g. Bornova etc.) get lower? Explain your answer