When a Competitive Market Experiences an Increase in Demand That

question 44

Multiple Choice

When a competitive market experiences an increase in demand that increases production costs for existing firms and potential new entrants, 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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