Why with a 6 increase in sales in the craft beer industry wh
Why with a 6% increase in sales in the craft beer industry, which a lot of other industries would kill for, will there likely be a significant reduction in the number of craft brewers in the near future?
Solution
Increase in sales leads to increase in profit. Higher profit attracts new suppliers of beer and when the new craft brewers enter the market, profit per brewer falls leading to fall in profit due to increase in competition. This will reduce the price of beer. Craft brewers are discouraged to produce beer and exit the market.
This will result in reduction in number of craft brewers in the near future.
