Consider a competitive market with a large number of identic

Consider a competitive market with a large number of identical firms. The firms in this market do not use any resources that are available only in limited. In this market, an increase in demand will

Solution

The firms don\'t use resources that are available in limited quantities. So, as firm output increases, they can use resources in higher quantity but at the same price.

Therefore, as quantity demanded increases, the firms can supply higher quantity without any increase in resource cost. So, price does not increase in short run or in long run.

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