Asked by Andrew Lujan on Jul 11, 2024
Verified
If demand in a perfectly competitive market increases, then an individual firm in that industry will see its profits fall.
Perfectly Competitive Market
A theoretical market structure characterized by an infinite number of small firms, homogeneous products, perfect information, and ease of entry and exit.
Demand Increases
A situation in market analysis where the quantity of a good or service that consumers are willing and able to buy rises.
- Identify the relationship between market demand and individual firm's profits in a perfectly competitive market.
Verified Answer
EA
ernie arandaJul 11, 2024
Final Answer :
False
Explanation :
In a perfectly competitive market, if demand increases, prices typically rise in the short run, leading to higher profits for individual firms as they sell their goods at higher prices.
Learning Objectives
- Identify the relationship between market demand and individual firm's profits in a perfectly competitive market.
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