With free entry and exit of firms in a perfectly competitive market and market in equilibrium, the sudden shift in demand curve will lead to which of the following in the long run?

No change in price, change in quantity

The correct answer is option 2: No change in price, change in quantity

• In a perfectly competitive market with free entry and exit, firms operate at the minimum average cost, and the market price is determined at this level in the long run.
• When demand shifts suddenly, in the short run, price may change.
• However, in the long run, firms enter or exit the market, adjusting supply until the price returns to its original equilibrium level.
• The final outcome is that price remains unchanged, but quantity changes to accommodate the new demand level.