If a firm in perfect competition is experiencing losses, firms will __the industry, shifting the market supply curve to the left, causing market price to __ until profits equal zero. A enter, fall B enter, rise C exit, fall D exit, rise
Added by Elizabeth S.
Close
Step 1
Step 1: In perfect competition, firms will exit the industry if they are experiencing losses. Show more…
Show all steps
Your feedback will help us improve your experience
Azat Nurmukhametov and 71 other Microeconomics educators are ready to help you.
Ask a new question
Labs
Want to see this concept in action?
Explore this concept interactively to see how it behaves as you change inputs.
Key Concepts
Recommended Videos
19. The figure shows the short-run conditions of a firm in a perfectly competitive market. In the long run, will the industry adjust so that the market supply curve shifts until prices are sufficiently to allow all firms to make a normal profit only? MC AC Quantity 1200 a) Existing firms exit; right; drop b) New firms enter; right; drop c) Existing firms exit; left; rise d) New firms enter; left; rise
Azat N.
Assume a constant-cost industry that is initially in long-run competitive equilibrium. An increase in demand will cause a(n) __________ in prices and profits, and as a result, firms will __________ the industry, causing the market supply curve to shift __________, which, in turn, will eventually cause the equilibrium price to be __________ before. a. decrease; exit; leftward; lower than b. increase; enter; rightward; higher than c. decrease; exit; rightward; higher than d. increase; enter; rightward; the same as e. increase; exit; leftward; lower than
Jennifer S.
What is the correct answer? In pure competition, if the market price of the product is lower than the minimum average total cost of the firms, then A. some firms will enter the industry and the industry supply will increase B. other firms will exit the industry and the industry supply will decrease C. some firms will exit the industry and the industry supply will increase D. other firms will enter the industry and the industry supply will decrease
Recommended Textbooks
Principles of Economics
Principles of Microeconomics for AP® Courses
Economics
Transcript
Watch the video solution with this free unlock.
EMAIL
PASSWORD