The correct answer would be, produce more output; new firms to enter the market; rightward.
A perfectly competitive market is initially in long run competitive equilibrium. Then, market demands increases. This causes existing firms in the market to produce more output and new firms to enter the market. As a result of the latter, the market supply curve shifts rightward.
Explanation:
A perfectly competitive market is considered to be a hypothetical market. In this market structure, the competition is at its peak. In perfect competition, there are:
- large number of buyers
- Homogeneous product
- Free entry and exit of firms
- No Price Control
When the demand for the product increases in the PC, the existing firms produce more products/increase their output, and new firms enter the market to fulfill the demands of the consumers. Due to this the market supply curve moves rightwards.
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