Suppose that all firms in a perfectly competitive industry are experiencing economic losses to varying degrees.One can predict that
A) market supply will increase.
B) market demand will decrease.
C) the market price will decrease.
D) market demand will increase.
E) the market price will rise.

Question

Quizplus · Accepted Answer

In a perfectly competitive market, if firms are experiencing economic losses, some will exit the market, reducing the market supply. This reduction in supply will lead to an increase in the market price until firms are no longer making losses.

Suppose That All Firms in a Perfectly Competitive Industry Are