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[Guest]

suppose that the demand curve for travel services is
q = Ap−α
where p is the price of travel services, and q the quantity of such services demanded.
Here A and α are positive constants.

What fraction of the industry’s date T productive capacity is replaced at the
“shakeout” date T? Take T as given (no need to calculate it). Express your answer
in terms of T , g, and α. (hint: The productive capacity equals the output of the
industry)

Any ideas???

Thanks

 

[stapel]

Please clarify: What is a "shakeout" date?

Thank you.

Eliz.