The entry of new firms into a competitive market will

Asked by admin @ 05/11/2021 in Business viewed by 263 People

Assume that firms in a perfectly competitive market are earning economic profits. Which of the following statements describes the change in market price and output as a result of the entry of new firms into this market?

A) The short - run market supply curve shifts to the right, causing price to fall and total market output to increase.
B) The short - run market supply curve shifts to the left, causing price to fall and total market output to increase.
C) The market demand curves shifts to the left, causing price to fall and market output to decrease.
D) The market demand curves shifts to the right, causing price to fall and market output to increase.

Answered by admin @ 05/11/2021

Answer:

The correct answer is option A.

Explanation:

In a perfect competition, there is no restriction on entry or exit of firms. So, when firms earn positive economic profits, it attracts other firms to enter the market. When new firms join it leads to an increase in supply.

The short run supply curve shifts to the right, causing the price level to fall. The total output in the market will increase. It would lead to reduction n profit.

The process of new firms entering the market will continue till all the profits is exhausted.

Able, baker, and charles are engaged in the marketing to and enrollment of beneficiaries into medicare health plans. mr. able is an independent agent paid directly by a health plan. ms. baker is an independent agent paid through a field marketing organization (fmo). mr. charles is an independent agent paid for his work by a third-party marketing organization (tmo). how do the cms compensation rules apply to these three agents?

Asked by maham237 @ 13/01/2021 in Business viewed by 2748 persons

The entry of new firms into a competitive market will

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