What Happens in a Competitive Industry When More Firms Enter

question 44

Multiple Choice

What happens in a competitive industry when more firms enter?

• A) Demand decreases and the price declines, which in turn lowers profits.
• B) Supply increases and the price declines, which in turn lowers profits.
• C) Supply increases and the price rises, which in turn raises profits.
• D) Demand increases and the price rises, which in turn raises profits.

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Definitions:

Milgram Experiment

A psychological experiment conducted by Stanley Milgram in the 1960s to study obedience to authority, where participants were instructed to administer electric shocks to another person.

Stanford University Prison Experiment

A psychological study conducted by Philip Zimbardo in 1971 at Stanford University, where students were assigned roles of prisoners and guards to explore the effects of perceived power.

Generalization

Drawing a conclusion about a certain characteristic of a population based on a sample from it.

Logical Support

The provision of reasons or evidence to justify a claim or argument.