If Demand Increases in a Perfectly Competitive Market

question 110

Multiple Choice

If demand increases in a perfectly competitive market,

• A)then,in the short run,existing firms will find their profits diminishing,or their losses increasing
• B)existing firms will earn an economic profit
• C)the market price will decrease
• D)each firm will produce more along its short-run supply curve and total output will increase along the short-run market supply curve
• E)quantity demanded will increase and quantity supplied will decrease

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Definitions:

Financial Crisis

A situation where financial assets suddenly lose a significant part of their nominal value, often leading to bankruptcies and economic downturns.

Behavioral Economics

A field of economics that studies how psychological, cognitive, emotional, cultural, and social factors affect economic decision-making and behaviors.

Financial Gain

An increase in financial wealth, often resulting from investments or the operations of a business.

Sufficient Willpower

The necessary amount of determination and self-control required to achieve a goal or follow through with a decision.