If the demand increases in a perfectly competitive market,the price will:

Question

Quizplus · Accepted Answer

In a perfectly competitive market, the price is determined by the intersection of the market demand and supply curves. An increase in demand leads to a temporary shortage, which puts upward pressure on the price. As firms increase production in response to the higher price, the market supply also increases, which eventually brings the price back down to the long-run equilibrium level. Therefore, the price increase is only temporary in the short run.

If the Demand Increases in a Perfectly Competitive Market,the Price