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The number of sellers in a market influences the overall supply of goods or services available. When more sellers enter a market, the total supply increases, causing a rightward shift in the supply curve. Conversely, if sellers exit the market, the total supply decreases, resulting in a leftward shift in the supply curve.
Several factors can impact the number of sellers in a market. For instance, low barriers to entry, such as minimal start-up costs or easy access to resources, can encourage more firms to enter the market, increasing the number of sellers. On the other hand, high barriers to entry, such as strict regulations or substantial capital requirements, may deter new firms from entering the market, reducing the number of sellers.
Additionally, changes in market conditions, technological advancements, or shifts in consumer preferences can also influence the number of sellers. Overall, the number of sellers is crucial in determining the supply curve's position and the equilibrium price and quantity in a market.
From Chapter 3:
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