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Economics (MindTap Course List)

13th Edition
Roger A. Arnold
ISBN: 9781337617383

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BuyFindarrow_forward

Economics (MindTap Course List)

13th Edition
Roger A. Arnold
ISBN: 9781337617383
Textbook Problem

Suppose all firms in a perfectly competitive market are in long-run equilibrium. Illustrate what a perfectly competitive firm will do if market demand rises.

To determine

Graphical illustration of effect of increase in demand on perfectly competitive firm.

Explanation

Figure 1 shows the shift in demand curve

In figure 1, the vertical axis measures price and horizontal axis measures quantity. The upward sloping curve “S” is the supply curve and downward sloping curve “D” is the demand curve. A is the initial equilibrium point. Increase in demand shifts the demand curve to right...

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