CBSE Class 12-commerce Answered
What is the impact of an increase in the number of firms
on equilibrium price and quantity? Illustrate with diagram.
Asked by Topperlearning User | 26 Apr, 2016, 07:36: AM
Expert Answer
Assume that all other things remain constant; at each price level more firms are able to supply the good. This will shift the supply curve towards right but it does not have any effect on the demand curve.
(DD need to mention I the figure)
In the figure, the supply curve shifts from SS to SS1, whereas the demand curve remained the same at DD. As a result, there is reduction in the price level and increase in the quantity produced in the market.
Answered by | 26 Apr, 2016, 09:36: AM
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