Exhibit 22-9

-Refer to Exhibit 22-9. Suppose that the market starts out at long-run competitive equilibrium with price equal to P₁and producing Q₁output, and then demand increases from D₁ to D₂. As a consequence, the typical profit-maximizing firm will

Question

Exhibit 22-9

-Refer to Exhibit 22-9. Suppose that the market starts out at long-run competitive equilibrium with price equal to P₁and producing Q₁output, and then demand increases from D₁ to D₂. As a consequence, the typical profit-maximizing firm will

Quizplus · Accepted Answer

When demand increases in a competitive market, the market price typically rises in the short run, leading firms to increase their output to maximize profits. This is because the higher price makes it profitable to produce and sell more, assuming costs do not change immediately.

Exhibit 22-9 ​

Exhibit 22-9