If the Market Demand for the Product Increases, in the Short

question 199

Multiple Choice

If the market demand for the product increases, in the short run a purely competitive firm

• A)will not change its output quantity because there are so many firms that the individual firm will not be affected by the change.
• B)will earn higher profits or experience smaller losses as a result of the change in the market.
• C)will experience no change in costs as it steps up production in response to the change in the market.
• D)can employ more inputs and increase the size of its plant, to respond to the change in the market.

---

Definitions:

Purely Competitive Producer

A firm operating in a market where there are many buyers and sellers dealing in homogeneous products, with no single entity having significant market control.

Economic Profit

The difference between total revenue and total costs, including both explicit and implicit costs, representing the financial gain in excess of opportunity costs.

Brand Name

The name given to a product or service by its company to distinguish it from competitors' offerings, often protected as a trademark.

Total Market

The entire demand for a product or service within a particular industry, including all potential customers.