Question

If firms in a competitive industry begin to earn profit in the short run, new firms will enter. This will shift the industry a. demand curve to the right, meaning market price will rise. b. demand curve to the left, meaning market price will fall. c. supply curve to the right, meaning market price will fall. d. supply curve to the left, meaning market price will rise.

Answer 1

c. supply curve to the right, meaning market price will fall.

Step-by-step explanation:

If firms in a competitive market start to make a large profit, more firms will enter that market because they will also want a share of it. As more firms enter the market, total quantity supplied will increase, shifting the supply curve to the right and lowering the equilibrium price.