If the entry of new firms in a perfectly competitive industry substantially increases the market demand...
If the entry of new firms in a perfectly competitive industry substantially increases the market demand for resources,
a) this reduces the market price of resources
b) this raises the market price of resources
c) the market price of resources does not change
d) this lowers the ATC curves of individual firms
Homework Answers
Ans is B
Entry of new firms will increase the demand for resources due to which market price of resources will increases keeping supply constant.
However actual prices of resources depends on the nature of cost industry but from above option, 2nd option is partially correct
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If the entry of new firms in a perfectly competitive industry
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