The textile industry is composed of a large number of small firms. In recent years, these firms have suffered economic losses, and many sellers have left the industry. Economic theory suggests that if technology, imports, and other factors remain constant, these conditions will
A) shift the market demand curve outward so that price will rise to the level of production cost.
B) cause the remaining firms to collude so they can produce more efficiently.
C) cause the market supply to decline and the price of textiles to rise.
D) cause firms in the textile industry to suffer long-run economic losses.

Question

Quizplus · Accepted Answer

As firms exit the industry due to economic losses, the market supply decreases, leading to an increase in the price of textiles until remaining firms can cover their costs.

The Textile Industry Is Composed of a Large Number of Small