The following question are based on the following table showing the supply curves of the five individual firms constituting the rutabaga market in a small community. Assume that simultaneous changes in output by all firms do NOT affect input prices.

-In the short run,what adjustments take place when a perfectly competitive market in long-run equilibrium experiences an increase in demand?
A) Price and profits fall, causing new firms to enter and existing firms to expand.
B) Price and output remain fixed.
C) Price rises but output remains unchanged.
D) Price rises and firms expand output by using existing capacity more intensively.
E) New firms enter and existing firms expand capacity, leading to an increase in supply and a decline in price.
Correct Answer:
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