If Demand Increases in a Perfectly Competitive Market

question 105

Multiple Choice

If demand increases in a perfectly competitive market,

• A)the market price will fall
• B)firms already in the market will supply more output
• C)new firms will enter the market
• D)the short-run market supply curve will shift to the right
• E)each firm's marginal cost curve will shift to the right

---

Definitions:

Cash Break-Even

The point at which a business generates just enough cash flow to cover its operating expenses, not accounting for any profitability.

Selling Price

The amount of money a buyer pays to purchase a product or service.

Variable Costs

Expenditures that fluctuate relative to the quantity of output or services provided by a business.

Operating Cash Flows

Cash generated from a company's normal business operations, indicating its ability to generate sufficient positive cash flow to maintain and grow its operations.