When a third firm enters a market that was previously categorized as a duopoly,the equilibrium price will ________ and the equilibrium quantity will ________.
A) be lower; be lower
B) be higher; be lower
C) be lower; be higher
D) be higher; be higher
E) not change; not change

Question

Quizplus · Accepted Answer

The entry of a third firm into a previously duopolistic market typically increases competition, leading to a lower equilibrium price and a higher equilibrium quantity as the new firm adds to the total supply.

When a Third Firm Enters a Market That Was Previously