If the firms in a perfectly competitive market are making losses, then in the long run, firms will leave the market, decreasing market supply until the price increases up to ATC.
Added by David C.
Step 1
** Show more…
Show all steps
Your feedback will help us improve your experience
Derek Fairburn and 53 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
Assume the purely competitive market is in long-run equilibrium. For some reason market demand increases. What would happen? Group of answer choices At first, all firms would achieve economic profit, but eventually economic profit would fall back to zero as new firms enter the market. Market price would increase, and producers would band together to prevent new entrants to the market. Market prices would fall, causing producers to reduce output. All economic losses are incurred, firms start leaving the market. An increase in market demand would not produce any change in price, production, or the movement of firms in and out of the market.
Jennifer S.
With no barriers to entry or exit and when firms in a market are operating at a loss, we can expect other firms to exit, causing the ________ curve to shift to the ________ and making the equilibrium price ________ and the equilibrium quantity ________. supply; left; increase; increase supply; left; increase; decrease supply; right; decrease; increase demand; left; decrease; decrease demand; right; increase; increase
If all suppliers in a perfectly competitive market are currently making a profit at the equilibrium market price, what would be expected to happen in the long run? Select one: a. The equilibrium market price will increase b. The market demand curve will shift to the right c. The market supply curve will shift to the left d. The market demand curve will shift to the left e. The equilibrium market price will decrease
Andrew D.
Recommended Textbooks
Principles of Economics
Principles of Microeconomics for AP® Courses
Economics
Transcript
18,000,000+
Students on Numerade
Trusted by students at 8,000+ universities
Watch the video solution with this free unlock.
EMAIL
PASSWORD