The exit of firms from a market,ceteris paribus,
A)Shifts the market supply curve to the right.
B)Reduces the economic losses of remaining firms in the market.
C)Increases the equilibrium output in the market.
D)Shifts the market demand curve to the left.

Question

Quizplus · Accepted Answer

When firms exit a market, the supply decreases because there are fewer producers. This reduction in supply, ceteris paribus, can lead to higher prices for the goods or services in the market. The remaining firms, now facing less competition and potentially higher prices, may experience reduced economic losses as they can sell their products at a higher price. Choices A, C, and D do not accurately describe the effects of firms exiting a market.

The Exit of Firms from a Market,ceteris Paribus