If new firms enter a perfectly competitive industry seeking economic profit and begin producing goods, which of the following will occur?
a. The market supply curve will shift leftward with movement along an unchanged demand curve.
b. The market supply curve will shift rightward with movement along an unchanged demand curve.
c. The market supply and demand curves will both shift to the left.
d. The market supply and demand curves will both shift to the right.
e. There will be movement down and to the right along a fixed supply curve.
B
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Which of the following is true for a price-searcher firm?
a. Its marginal revenue curve will lie below its demand curve. b. Its marginal revenue curve will lie above its demand curve. c. Its marginal revenue curve is equal to its demand curve. d. Its marginal revenue curve is horizontal at the market equilibrium price.
Suppose that Angelo and Sonia each win $500 in a charity raffle. Angelo spends his winnings on a new ipad. Sonia saves her winnings. Which of the following is correct?
a. Both Angelo's and Sonia's behavior suggest that they base their purchasing decisions on transitory income. b. Angelo's behavior suggests that he bases his purchasing decisions on transitory income rather than permanent income. Sonia's behavior suggest that she bases her purchasing decisions on permanent income rather than transitory income. c. Angelo's behavior suggests that he bases his purchasing decisions on permanent income rather than transitory income. Sonia's behavior suggests that she bases her purchasing decisions on transitory income rather than permanent income. d. Both Angelo's and Sonia's behavior suggest that they base their purchasing decisions on permanent income.