If the market demand for the product increases, in the short run a purely competitive firm
A)will not change its output quantity because there are so many firms that the individual firm will not be affected by the change.
B)will earn higher profits or experience smaller losses as a result of the change in the market.
C)will experience no change in costs as it steps up production in response to the change in the market.
D)can employ more inputs and increase the size of its plant, to respond to the change in the market.

Question

Quizplus · Accepted Answer

In the short run, a purely competitive firm will earn higher profits or experience smaller losses due to increased market demand, as it can sell more at a higher price before adjusting production significantly.

If the Market Demand for the Product Increases, in the Short