Graph 14-9
-Refer to Graph 14-9.Assume that the market starts in equilibrium at point A in panel (b).An increase in demand from DemanD₀ to DemanD₁ will result in:

Question

Graph 14-9 
-Refer to Graph 14-9.Assume that the market starts in equilibrium at point A in panel (b).An increase in demand from DemanD₀ to DemanD₁ will result in:

Quizplus · Accepted Answer

An increase in demand will initially raise prices and profits, attracting new firms to the market. In the long run, this leads to an increase in the number of firms and a new equilibrium at point C.

Graph 14-9 -Refer to Graph 14-9.Assume That the Market Starts in Equilibrium