When sellers exit a market in which the average seller has losses, the remaining sellers will each experience:
A)a rising price, higher sales, and increased market power.
B)a rising price, lower sales, and increased market power.
C)a steady price, higher sales, and decreased market power.
D)a steady price, lower sales, and decreased market power.

Question

Quizplus · Accepted Answer

When sellers exit a market in which the average seller has losses, the supply in the market decreases. This creates a shortage which drives the price of the product upward. As a result, the remaining sellers will experience a rising price and higher sales. Additionally, with fewer competitors in the market, the remaining sellers will have increased market power.

When Sellers Exit a Market in Which the Average Seller