When new firms enter a competitive price-taker market,
A) economic profits of existing firms will continue to be zero.
B) entering firms will earn zero economic profit upon entry into the market.
C) existing firms may see their costs rise as more firms compete for limited resources.
D) prices will rise as existing firms raise prices to keep new firms out of the market.

Question

Quizplus · Accepted Answer

When new firms enter a competitive price-taker market, the increased competition for limited resources can lead to higher costs for existing firms.

When New Firms Enter a Competitive Price-Taker Market