In a competitive market where firms are earning economic losses,which of the following should be expected as the industry moves to long-run equilibrium,ceteris paribus?
A)A higher price and more firms.
B)A higher price and fewer firms.
C)A lower price and more firms.
D)A lower price and fewer firms.

Question

Quizplus · Accepted Answer

In a competitive market experiencing economic losses, firms will exit the market in the long run, reducing supply. This reduction in supply leads to an increase in price. With fewer firms remaining, the market moves towards long-run equilibrium.

In a Competitive Market Where Firms Are Earning Economic Losses,which