Holding all else constant, an increase in the market demand for a product in a competitive market...
Question:
Holding all else constant, an increase in the market demand for a product in a competitive market would cause:
a. a decrease in profits for the firm.
b. the average total cost (ATC) curve of the firms to increase.
c. the marginal revenue (MR) curve of the firms to increase.
d. the marginal cost (MC) curve of the firms to increase.
e. a decrease in the price a firm could charge for the product.
Market Demand
In economics, the market demand of a product refers to the sum of the all the consumers' demand of the same product. The market demand curve has a negative slope because the total quantity demanded falls as the price increases.
Answer and Explanation: 1
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- The correct answer is: c. the marginal revenue (MR) curve of the firms to increase.
In a competitive market, firms are price takers and so their...
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Perfectly Competitive Market: Definition, Characteristics & Examples
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Chapter 3 / Lesson 63
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Learn the definition of perfect competition and understand how a perfectly competitive market works. Study the characteristics of a perfectly competitive market with examples.
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