When firms enter a market,the supply increases and price:

Question

Quizplus · Accepted Answer

When a firm enters a market, the overall supply of the good or service increases. This increase in supply puts downward pressure on price, as there are now more sellers competing for the same pool of customers. As a result, the equilibrium price falls. Additionally, because the market is now more competitive, the new entrant and the existing firms may need to lower their prices further to attract customers, which leads to lower profits for all firms in the market. Therefore, the correct answer is C.

When Firms Enter a Market,the Supply Increases and Price