In a perfectly competitive market,an increase in demand will lead to a long-run increase in the product's price:
A) every time.
B) if the increase in demand for inputs drives up the price of inputs.
C) if the good in question is a Giffen good.
D) if and only if the increase in demand is temporary.

Question

Quizplus · Accepted Answer

In a perfectly competitive market, an increase in demand can lead to a long-run increase in the product's price if the demand for inputs also increases, causing the price of inputs to rise. This is because the higher costs of production would be passed on to consumers in the form of higher prices. Other options do not typically result in a long-run increase in price within the context of perfect competition.

In a Perfectly Competitive Market,an Increase in Demand Will Lead