When firms in a market are operating at a loss,you can expect some firms to exit the market,causing the ________ curve to shift to the ________ and making the equilibrium price ________ and the equilibrium quantity ________.

Question

Quizplus · Accepted Answer

When firms are operating at a loss, some firms will exit the market, causing the supply curve to shift to the left. This is because when firms exit the market, the overall supply decreases. As a result, the equilibrium price will increase and the equilibrium quantity will decrease. Therefore, the correct choice is E as it shows a leftward shift in the supply curve causing an increase in equilibrium price and a decrease in equilibrium quantity.

When Firms in a Market Are Operating at a Loss,you