Figure 14-7

-Refer to Figure 14-7. Assume that the market starts in equilibrium at point W in graph (b) . An increase in demand from D₀ to D₁ will result in

Question

Figure 14-7 -Refer to Figure 14-7. Assume that the market starts in equilibrium at point W in graph (b). An increase in demand from D₀ to D₁ will result in

Quizplus · Accepted Answer

An increase in demand leads to higher prices and profits in the short run, attracting new firms into the market. This increases supply, moving the market to a new long-run equilibrium at a point like Z, where profits are normalized due to the increased competition.

Figure 14-7 ​

Figure 14-7