As perfectly competitive firms leave a market because they are incurring an economic loss, the price of the good _______ and the economic loss of each remaining firm _______.

Question

Quizplus · Accepted Answer

As perfectly competitive firms exit the market due to economic losses, the supply decreases, leading to an increase in the price of the good. This, in turn, reduces the economic loss of each remaining firm, as they can sell their goods at a higher price.

As Perfectly Competitive Firms Leave a Market Because They Are