Question

​Sammie's Shiny Shoes is a firm that operates in a competitive market. The number of firms in the​ shoe-shining market increases. In the short​ run, Sammie will​ _______. A. not be affected by the number of competitors B. cut back on the number of shoes he shines C. increase the number of shoes he shines to maintain market share D. wait and see what happens to the market price

Answer 1

Answer:

The correct answer is option B.

Explanation:

An influx of new firms in the market would result in an increase in the supply in the market as a whole. With a rightward shift in the market supply curve, the price level will decline. The market share of each firm in the market will decline. With the reduction in price, Sammie will reduce supply or in other words cut back the number of shoes he shines.