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Basic Question 9 of 10
Assume that a perfectly competitive industry is in long-run equilibrium. If demand increases, which of the following will occur?
II. Firms will produce more output.
III. Firms will increase their profits.
IV. The industry will not be in long-run equilibrium.
I. Market price will increase.
II. Firms will produce more output.
III. Firms will increase their profits.
IV. The industry will not be in long-run equilibrium.
User Contributed Comments 5
| User | Comment |
|---|---|
| choas69 | very good question. |
| xemex131 | the demand curve for a perfectly competitive market is a horizontal line, increase in demand cannot lead to a price increase |
| abinavas | I am confused now with the Market Price Increase in Perfect Competition? Insights, please? |
| sshetty2 | The horizontal demand curve shifts upward due to an increase in demand meaning that the price on the y axis goes up |
| EEEEvia | I thought the price will not be affected |
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Learning Outcome Statements
describe characteristics of perfect competition, monopolistic competition, oligopoly, and pure monopoly
CFA® 2024 Level I Curriculum, Volume 1, Module 1.