Which of the following best describes how a perfectly competitive industry would respond to a sudden increase in popularity of the product? The market demand curve would shift to the right, leading to:
A. no change in the short-run equilibrium price, and a higher long-run equilibrium quantity.
B. a higher equilibrium price in the short run and entry into the market in the long run.
C. a higher equilibrium price in the short run and a permanent increase in economic profit.
D. a lower short-run equilibrium price due to the entry of firms into the market.
Answer: B
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