Final answer:
An increase in demand on a market in long-run competitive equilibrium leads to firms entering the market and increasing the supply.
Step-by-step explanation:
In the long run, an increase in demand on a market in long-run competitive equilibrium will result in firms entering the market, which increases the supply. This is because the higher demand signals that there is room for more firms to enter and compete for the increased demand.
For example, let's say there is a long-run competitive equilibrium in the smartphone market where all firms are earning zero economic profits. If the demand for smartphones suddenly increases, the existing firms in the market will see an opportunity to earn more profits. They will respond by increasing their production to meet the higher demand and potentially make positive economic profits. This increase in supply from existing firms and the entry of new firms into the market will eventually lead to a new long-run equilibrium where economic profits are driven down to zero once again.
In summary, an increase in demand on a market in long-run competitive equilibrium leads to firms entering the market and increasing the supply in order to meet the higher demand.