What happens to the supply curve if the number of firms increases?

When the number of firms in a market increases, the supply curve shifts to the right. This shift occurs because more firms producing a good or service generally increases the overall market supply available to consumers. As more suppliers enter the market, they contribute additional quantity at any given price level.

This increased supply often leads to lower market prices for consumers, assuming demand remains constant, because, with more competition, firms may lower their prices in order to attract customers. Additionally, the greater number of suppliers can result in a more efficient market, where goods and services are produced at lower costs over time, further promoting an increase in total supply.

In contrast, the other choices do not correctly reflect this dynamic. For instance, a leftward shift would indicate a decrease in supply, which is not the case when more firms enter the market. Similarly, an unchanged supply curve does not convey the effect of new firms entering a market, and a vertical shift lacks economic interpretation in this context. Thus, the correct response highlights the direct relationship between an increase in the number of firms and the resulting expansion of the supply side in the market.