When faced with an economic loss, a competitive firm will exit the industry in the long run.

Question

Quizplus · Accepted Answer

In the long run, firms have the opportunity to exit industries if they are experiencing economic losses. By exiting the industry, the firm can avoid further losses and allocate their resources towards more profitable opportunities. This process of firm exit helps to drive market equilibrium towards a point where firms are earning positive economic profits or returns.

When Faced with an Economic Loss, a Competitive Firm Will