An increase in demand will result in:

Question

Quizplus · Accepted Answer

An increase in demand can lead to higher economic profits as firms capitalize on the increased willingness of consumers to purchase goods or services. This, in turn, attracts entry by new firms into the market, drawn by the prospect of profits. Over time, as more firms enter, competition increases, which typically drives prices down and increases costs associated with competition (e.g., marketing, innovation), leading to a normalization of profits at zero economic profit in the long run, assuming a perfectly competitive market.

An Increase in Demand Will Result In