If new firms enter a perfectly competitive industry, the
A) market supply curve will shift to the left, market price will fall, and industry output will increase
B) market supply will shift to the left, market price will rise, and the industry output will increase
C) market demand will shift to the right, market price will increase, and market output will increase
D) market supply will shift to the right, market price will fall, and market output will increase
E) market supply will shift to the right, market price will increase, and market output will decrease

Question

Quizplus · Accepted Answer

When new firms enter a perfectly competitive industry, they add to the total quantity of goods or services available, which shifts the market supply curve to the right. This increase in supply, assuming demand remains constant, leads to a decrease in market price and an increase in the total output or quantity of goods or services produced in the industry.

If New Firms Enter a Perfectly Competitive Industry, the