When the number of firms is fixed, a shift in demand curve has a larger effect on price and a smaller effect on quantity compared to a market with free entry and exit. This can be explained as follows:

With Fixed Number of Firms: When demand shifts, the supply cannot adjust through entry or exit of firms. The equilibrium price must adjust to clear the market. An increase in demand raises the price significantly, and quantity increases only along the existing supply curve. Thus, the effect on price is larger while the effect on quantity is relatively smaller.

With Free Entry and Exit: In this situation, the equilibrium price is always equal to the minimum average cost of the firms. If demand increases, new firms enter the market, increasing supply. If demand decreases, firms exit, reducing supply. This ensures that price remains unchanged at minimum average cost.

Effect on Price: With free entry and exit, the shift in demand has no impact on equilibrium price. However, with fixed number of firms, the price changes significantly. Hence, the effect on price is larger when the number of firms is fixed.

Effect on Quantity: With free entry and exit, the impact of a shift in demand on equilibrium quantity is more pronounced. The quantity adjusts along with the number of firms in the same direction as the change in demand. With fixed number of firms, the quantity change is smaller.

Conclusion: Thus, with fixed number of firms, demand shifts cause larger price changes and smaller quantity changes, whereas with free entry and exit, price remains stable and quantity adjusts more significantly.