Refer to the Graphs Shown, Which Depict a Perfectly Competitive

Refer to the graphs shown, which depict a perfectly competitive market and firm. If market demand increases from D₀ to D₁, in the short run:

A) market price rises from P₀ to P₁ and the firm's output rises from q₀ to q₁.
B) market price rises from P₀ to P₁ and the firm's output rises from Q₀ to Q₁.
C) market price remains at P₀ because perfectly competitive firms can't earn positive economic profit.
D) the firm's output remains at q₀ because perfectly competitive firms can't earn positive economic profit.

Correct Answer:

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