Use the figure to answer the following question(s).
Figure 10-2
-If the cost and demand conditions of this competitive price-searcher firm depicted in Figure 10-2 are representative of the market, what will happen in the future?
A) Firms will go out of business, and the market price will rise.
B) The current market price will tend to persist into the future.
C) New firms will enter the market, and demand facing this firm will decline.
D) The firms in this industry probably will collude in order to increase their profitability.

Question

Use the figure to answer the following question(s).
Figure 10-2 
-If the cost and demand conditions of this competitive price-searcher firm depicted in Figure 10-2 are representative of the market, what will happen in the future?
A) Firms will go out of business, and the market price will rise. 
B) The current market price will tend to persist into the future. 
C) New firms will enter the market, and demand facing this firm will decline. 
D) The firms in this industry probably will collude in order to increase their profitability.

Quizplus · Accepted Answer

If the firm is a competitive price-searcher and is making profits, new firms will enter the market, increasing competition and reducing the demand for the existing firm's product.

Use the Figure to Answer the Following Question(s)