With no barriers to entry or exit and when firms in a market are operating at a loss,you can expect other firms to exit,causing the _________ curve to shift to the _________ and making the equilibrium price _________ and the equilibrium quantity _________.

Question

Quizplus · Accepted Answer

When firms in a market are operating at a loss, it implies that they are not earning enough revenue to cover their costs. In the long run, this situation results in firms leaving the market. With no barriers to entry or exit, other firms will enter the market, leading to an increase in the supply. Consequently, the supply curve will shift to the left, and the equilibrium price will decrease while the equilibrium quantity sold will also decrease. Therefore, the correct choice is (E) supply; left; increase; decrease.

With No Barriers to Entry or Exit and When Firms