Refer to Figure 14-14. Assume that the market starts in equilibrium at point W in panel (b). An increase in demand from D0 to D1 will result in
a. A new market equilibrium at point X
b. An eventual increase in the number of firms in the market and a new long-run equilibrium at point Z
c. Rising prices and falling profits for existing firms in the market
d. Falling prices and falling profit for existing firms in the market
Ans: b. An eventual increase in the number of firms in the market and a new long-run equilibrium at point Z
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