With free entry:
A) the long run market supply curve is horizontal at the market price.
B) the long run market supply curve is vertical at the market price.
C) the short and long run market supply curves are the same.
D) there is a known and limited number of potential suppliers that can produce a good in the long run.

Question

Quizplus · Accepted Answer

With free entry, any firm can enter the market in the long run if the market price is higher than the average cost of production. This means that the number of firms in the market is not fixed and can increase or decrease depending on the market conditions. Thus, the long run market supply curve is horizontal at the market price, indicating that the market can be supplied with any quantity of the good at the given price.

With Free Entry