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Question: refer to figure 147 assume that the market starts in...

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Figure 14-7 Price Price Supplyo MC Supply, ATC P1 Demandi Demando Q,Q2 Quantity Qr1QyQ Quantity

Refer to Figure 14-7. Assume that the market starts in equilibrium at point A in panel (b). An increase in demand from Demand0 to Demand1 will result in

a) an eventual increase in the number of firms in the market and a new long-run equilibrium at point D.

  

b) rising prices and falling profits for existing firms in the market.

   

c) prices and falling profits for existing firms in the market.

  

d) a new market equilibrium at point B in the short run, before new firms enter the market.

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