Suppose That the Market for Haircuts in a Community Is

Multiple Choice

Suppose that the market for haircuts in a community is a perfectly competitive constant-cost industry and that the market is initially in long-run equilibrium. Subsequently, an increase in population increases the demand for haircuts. In the long run, we expect that:

A) more firms will enter the market, driving the price of haircuts up and the profits of individual firms back down to zero.
B) more firms will enter the market, driving the price of haircuts down and the profits of individual firms back down to zero.
C) firms will leave the market, driving the price of haircuts up and the profits of individual firms up.
D) firms will leave the market, driving the price of haircuts up and the profits of individual firms back down to zero.