What will happen if all competitive firms increase in size?
A)The market demand will fall causing the price and profits to fall.
B)The market supply will fall causing the price and profits to rise.
C)The market supply will rise causing the price and profits to rise.
D)The market supply will rise causing the price and profits to fall.
E)The market demand will rise causing the price and profits to fall

Question

Quizplus · Accepted Answer

When all competitive firms increase in size, the market supply will rise. This will lead to a decrease in price and profits as demand will not necessarily increase at the same rate. With more supply than demand, there will be a surplus of goods, leading to a decrease in price and profit margins for the firms.

What Will Happen If All Competitive Firms Increase in Size