When new firms enter a perfectly competitive market,what will be the likely result

Question

Quizplus · Accepted Answer

When new firms enter a perfectly competitive market, the short-run market supply curve shifts to the right as there are now more firms producing the same goods and services, which increases the quantity supplied. However, demand does not necessarily increase, so option A is incorrect. The entry of new firms would not cause the short-run market supply curve to shift to the left, so option C is incorrect. Existing firms are unlikely to increase prices as they are price takers in a perfectly competitive market, so option D is incorrect.

When New Firms Enter a Perfectly Competitive Market,what Will Be