In a perfectly competitive market, tastes and preferences lead to an increase in the demand for the good.Holding everything else constant, this will lead to an increase in price that will result in:
A.positive economic profits for firms, which will attract new firms, which in turn will result in a reduction in the price.
B.economic losses for firms, which will attract new firms, which in turn will result in a reduction in the price.
C.positive economic profits for firms, which will lead some firms to leave the industry and thus result in an even greater price increase.
D.economic losses, which will lead some firms to leave the industry and thus result in an even greater price increase.
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