In the long run, the number of firms in an industry may change. If the number of firms increases, then
A) the supply curve will shift outward to the right.
B) the demand curve will shift outward to the right.
C) the supply curve will shift inward to the left.
D) the demand curve will shift inward to the left.

Question

Quizplus · Accepted Answer

When the number of firms in an industry increases, it means there are more producers supplying the market. This increase in supply, assuming demand remains constant, shifts the supply curve outward to the right, indicating a greater quantity of goods or services is available at each price level.

In the Long Run, the Number of Firms in an Industry