A market is initially in a long-run equilibrium and there is a permanent increase in demand.After the new long-run equilibrium is reached,there
A) are more firms in the market.
B) are fewer firms in the market.
C) are the same number of firms in the market.
D) probably is a different number of firms in the market, but more information is needed to determine if the number of firms rises, falls, or perhaps does not change.
E) is no change in the market.

Question

Quizplus · Accepted Answer

In response to a permanent increase in demand, the market adjusts by attracting more firms to enter due to higher profit opportunities. This leads to a new long-run equilibrium with more firms in the market to meet the increased demand.

A Market Is Initially in a Long-Run Equilibrium and There