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An increase in the number of firms selling a good in a market, other things constant, will cause the industry supply curve to:
Ashift leftwards, decreasing supply
Bshift rightwards, increasing supply
Cstay fixed while quantity demanded rises
Dbecome perfectly vertical at the old output
Answer & Solution
Correct answer: B. shift rightwards, increasing supply
1. Market supply is the sum of the supplies of all firms.
2. More firms entering add to the total quantity offered at each price.
3. More offered at each price is an increase in supply.
4. An increase in supply shifts the industry curve rightwards.
_Source: ICAI BoS CA Foundation Paper 4 Business Economics, Ch 2 Unit III "Supply", p.2_
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