What happens in a competitive industry when more firms enter?

a. supply increases and the price rises, which in turn raises profits.

b. demand decreases and the price declines, which in turn lowers profits.

c. supply increases and the price declines, which in turn lowers profits.

d. demand increases and the price rises, which in turn raises profits?

Question

Business

Kenneth Cannon

8 February, 04:50

What happens in a competitive industry when more firms enter?

a. supply increases and the price rises, which in turn raises profits.

b. demand decreases and the price declines, which in turn lowers profits.

c. supply increases and the price declines, which in turn lowers profits.

d. demand increases and the price rises, which in turn raises profits?

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Answers (1)

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Moriah Little · Answer 1

What happens in a competitive industry when more firms enter? Supply increases and the price declines, which in turn lowers profits. When there is a large number of suppliers the prices drop because they are having to compete with one another. As more enter the market they have to fight to compete with one another for profits.