Greenaqua Corp. is the only supplier of bottled drinking water in Lithasia. Its positive economic profits in the short run attract new companies to the market. If new companies producing their own line of bottled drinking water enter the market, which of the following statements is likely to be true?

Question

Quizplus · Accepted Answer

When new companies enter the market, consumers have more options, making them more sensitive to price changes in Greenaqua Corp.'s bottled water. This increases the price elasticity of demand for Greenaqua Corp.'s product.