Question

The film processing industry (which turns exposed film into photographs) is perfectly competitive and any firm in the industry initially makes zero economic profits.

a. Show the impact of the invention of digital cameras (a substitute for film cameras) on the film processing industry and on a typical film processing firm in the short run. Give a short written explanation.

b. Show the long run impact of digital cameras on the industry and a typical firm. Again, explain your findings in a sentence or two.