2. Describe what happens to output, price, and economic profit in the short run and in...

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2. Describe what happens to output, price, and economic profit in the short run and in the long run in a competitive market f

business economics

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Answer 1

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a. Increase in demand

The increase in demand will sift the demand curve to the right, increasing price, output increasing as well . Firms will be enjoying economic profit.

b.The decrease in demand will shift the demand to the left lowering price and output. Firms will supply lower output and there will be economic losses.

c.This will make firms produce more. This will lower market price, but firms will not encounter any positive economic profit.

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