General Snacks is a typical firm in a market characterized by monopolistic competition. Initially, the market is in long-run equilibrium, and then there is an increase in the market demand for snacks. In the short run the price of snacks will _____ and the output of snacks will _____.
A) fall; fall
B) remain unchanged; remain unchanged
C) rise; fall.
D) rise; rise

Question

Quizplus · Accepted Answer

In the short run, an increase in market demand in a monopolistically competitive market leads to a higher price and increased output as firms respond to the higher demand.

General Snacks Is a Typical Firm in a Market Characterized