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) The short run market supply curve is horizontal at the market price

Question

Quizplus · Accepted Answer

With free entry, firms can enter and exit the market easily in the long run. This means that if the market price increases, new firms will enter the market, increasing the overall supply, which would make the long run market supply curve horizontal at the market price. Similarly, if the market price decreases, existing firms would exit the market, decreasing the overall supply, which would make the long run market supply curve horizontal at the market price.

With Free Entry