Consider a firm with market power. As firms exit the industry, one can see this as:
A)a shift to the right of each individual firm's demand curve.
B)a shift to the left of each individual firm's MC curve.
C)an upward shift upward of each individual firm's ATC curve.
D)a shift to the left of each individual firm's supply curve.

Question

Quizplus · Accepted Answer

When firms exit the industry, the remaining firms face less competition, which typically increases the demand for their products. This is represented by a rightward shift in each individual firm's demand curve, as they can now capture a larger share of the market.

Consider a Firm with Market Power