If firms in a competitive industry are suffering economic losses,then one would expect that in the long run

Question

Quizplus · Accepted Answer

If firms in a competitive industry are suffering economic losses, it means that the market price is below the average total cost of production. In the long run, firms will have to exit the market to avoid further losses. As a result, the supply curve for the product will shift to the left as firms leave the industry, causing industry output to fall and price to rise. This will continue until firms in the industry are earning zero economic profit, which is the point where they are covering all of their opportunity costs including normal profits. Therefore, C is the best answer.

If Firms in a Competitive Industry Are Suffering Economic Losses,then