If a new company enters a product market, what will happen to the existing companies in the market?
A)Their average cost curves will shift up.
B)Their marginal revenue curves will shift to the right.
C)Their demand curves will shift to the left.
D)Their demand curves will shift to the right.

Question

Quizplus · Accepted Answer

The entry of a new company in the product market will increase competition, causing the demand curves for existing companies to shift to the left as consumers have more options to choose from. This will lead to a decrease in market share and potentially lower profits for existing companies, but it does not necessarily mean their cost curves or marginal revenue curves will shift.

If a New Company Enters a Product Market, What Will