Question

The smartphone market is in​ long-run equilibrium. Then the demand for smartphones increases. Describe what happens in the market for smartphones. In the short​ run, firms will​ _______.
A. incur an economic loss
B. continue to break even
C. make an economic profit

Answer 1

Answer:

C. make an economic profit

Explanation:

Demand increase means the shifting of the demand curve to the right. At the same quantity new price will be higher than old price.

Regardless of whether a firm choose to produce more phones (if marginal cost increases more than marginal revenue they may choose not to) they can earn more revenue at the same quantity produced and make an economic profit.