Final answer:
The entry of eight new companies into the bike market is likely to affect the supply of mountain bikes, increasing supply and potentially lowering the equilibrium price while increasing the equilibrium quantity.
Step-by-step explanation:
When eight new companies join the bike market, this is likely to affect the supply of mountain bikes. The introduction of new companies increases the market competition, thus increasing the overall supply of bikes. This phenomenon typically shifts the supply curve to the right, indicating a higher quantity supplied at each price level.
The change in supply is caused by the entry of new producers into the market, which can result from various factors such as technological advancements, decreased barriers to entry, or increased market potential. Assuming the demand for mountain bikes remains constant, an increase in supply tends to lower the equilibrium price and increase the equilibrium quantity, as more suppliers are willing to sell at lower prices to attract consumers while more bicycles are available for purchase.