When a Competitive Market Experiences an Increase in Demand That

question 10

Multiple Choice

When a competitive market experiences an increase in demand that induces an increase in production costs,which of the following is most likely to arise?

• A)The long-run market supply curve will be upward sloping.
• B)The condition of free entry into the market will be violated.
• C)Producer profits will fall in the long run.
• D)The long-run market supply curve will be horizontal as new firms enter and drive the price downward.

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Definitions:

Foreign Company

A company that is incorporated in a country outside of the one in which it conducts a significant portion of its business activities.

Joint Venture

An agreement where multiple parties decide to combine their assets to achieve a particular goal.

Global Market Entry

Strategies and methodologies employed by businesses to enter and establish a presence in international markets.

Ownership

The legal right or state of having complete control and possession over property, assets, or an entity.