When a Competitive Market Experiences an Increase in Demand That

Multiple Choice

When a competitive market experiences an increase in demand that increases production costs for existing firms and potential new entrants, which of the following is most likely to arise?

A) The long-run market supply curve will be upward sloping.
B) The condition of free entry into the market will be violated.
C) Producer profits will fall in the long run.
D) The long-run market supply curve will be horizontal as new firms enter and drive the price downward.