Scenario: There are several pen manufacturers in Corinthia. However, the pens sold by each manufacturer have a unique design.
-Refer to the scenario above.How will the demand for pens faced by the existing pen manufacturers in Corinthia be affected if new firms enter the industry in the long run?

Question

Quizplus · Accepted Answer

The entry of new firms in the industry will increase the supply of pens, which will decrease the price of pens, and consequently, the demand faced by existing manufacturers will decrease. This is because consumers will have more options to choose from, and they will be less willing to pay a higher price for pens from existing manufacturers.

Scenario: There Are Several Pen Manufacturers in Corinthia