If existing fast food firms realise sizable economic profits in the short run, the demand curves of existing firms will

Question

Quizplus · Accepted Answer

As new firms enter the market, the supply of fast food will increase, which will shift the supply curve to the right. This will cause a decrease in the equilibrium price and quantity. As a result, the demand curves of existing firms will decrease and become more price elastic, as they will have to compete with new entrants who are offering lower prices.

If Existing Fast Food Firms Realise Sizable Economic Profits in the Short