If the demand decreases in a perfectly competitive market,firms will likely:

Question

Quizplus · Accepted Answer

If the demand decreases in a perfectly competitive market, firms will likely experience negative profits in the short run as they try to lower prices to maintain customers. In the long run, firms will experience zero profits as some firms will exit the market due to the decreased demand, which reduces supply and increases prices until normal profits are restored. Some firms may also exit the market in hopes of capturing profits elsewhere. Therefore, all of the options listed are true.

If the Demand Decreases in a Perfectly Competitive Market,firms Will