were routinely beaten by the Taliban’s religious police He toldThe Wall Street Journal, “This was very bad for them, but it was good for me.” Of course, Mr Islamadin was not the only producer to get into the industry Other Afghani merchants, as well as merchants from Pakistan and China, also jumped at the opportunity The entry of new firms exemplifies an important characteristic of perfect competition Whenever there is an opportunity to earn economic profits— even an unexpected opportunity—new firms will enter, provided that entry is easy The model of perfect competition also assumes that exit will be easy if and when a firm experiences economic losses When the Taliban rulers were ousted by the United States and its allies in 2001, Mr Islamadin expected that the demand for burkhas would begin to fall It did The sales fell 50% almost immediately Prices fell as well, generally by about 20% It was simple for Mr Islamadin to leave the industry He gave his remaining stock of burkhas to a brother who was producing them in the countryside where women continued to wear them As for Mr Islamadin, he has made plans to go into the glassware business He expects the demand for glass teacups to be strong whatever happens in Afghanistan’s critical future Source: Andrew Higgins, “With Islamic Dress, Out Goes the Guy Who Sold Burkhas,” The Wall Street Journal, December 19, 2001, p A1 ANSWERS TO TRY IT! PROBLEMS Not perfectly competitive–There are few sellers in this market (Fedex, UPS, and the United States Postal Services are the main ones in the Attributed to Libby Rittenberg and Timothy Tregarthen Saylor URL: http://www.saylor.org/books/ Saylor.org 472