If firms enter a purely competitive industry, then in the long run this change will shift the industry
A) demand curve to the left, and the individual firm's demand curve will shift down.
B) demand curve to the right, and the individual firm's demand curve will shift up.
C) supply curve to the right, and the individual firm's demand curve will shift down.
D) supply curve to the left, and the individual firm's demand curve will shift up.

Question

Quizplus · Accepted Answer

In a purely competitive industry, the entry of new firms increases the market supply, shifting the industry supply curve to the right. This increased supply leads to a lower market price, causing the individual firm's demand curve, which is perfectly elastic, to shift down.

If Firms Enter a Purely Competitive Industry, Then in the Long