When new firms enter a perfectly competitive market,
A)demand increases.
B)the short-run market supply curve shifts right.
C)the short-run market supply curve shifts left.
D)existing firms will increase prices to keep the new firms from entering.

Question

Quizplus · Accepted Answer

When new firms enter a perfectly competitive market, the market supply curve shifts right. This is because there are now more firms producing and selling the good, increasing the total quantity supplied at each price level. However, this does not necessarily mean that demand increases or that existing firms will increase prices.

When New Firms Enter a Perfectly Competitive Market