When there is an increase in the number of firms, what is the impact on demand and supply curve?

Supply curve shifts towards right and demand curve does not change

The correct answer is Option 3: Supply curve shifts towards right and demand curve does not change

• An increase in the number of firms means more producers are supplying the commodity.
• This leads to an increase in market supply, shifting the supply curve to the right.
• The demand curve remains unchanged because the number of consumers and their preferences do not change due to an increase in firms.