13. If the market demand for this product increases, which of the following stat

Question

13. If the market demand for this product increases, which of the following statements is correct?

            a. Product price will increase and production costs will fall, resulting in greater profits.

            b. Product price will decrease and production costs will rise, resulting in greater profits.

            c. Product price will decrease and production costs will rise, resulting in lower profits.

            d. Product price will increase and production costs will fall, resulting in lower profits.

            e. Product price will increase and profits will increase.

Explanation / Answer

when the demand for a product increases , the prices charged will rise production cost will decrrease and production cost rises because more number of producers and the firms will keep entering till there are zero abnormal profits in the long run.

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