Figure 7-1 shows the market demand curve and an individual firm's demand curve in a perfectly competitive market. In Graph A, the market demand has increased from d₀ to d₁ and, as a result, _____.Figure 7-1

Question

Quizplus · Accepted Answer

When market demand increases, the market price and the price of each individual firm in the market will also increase. In this case, the intersection of the market demand curve and the firm's demand curve has shifted from point B0 to point B11, which means the price that the firm can sell its output has risen from $5 to $6.

Figure 7-1 Shows the Market Demand Curve and an Individual