Three firms are currently producing and selling in a market.When one of the three firms exits the market,economists expect that the equilibrium price will ________ and the equilibrium quantity will ________.
A) be lower; be lower
B) be higher; be lower
C) be lower; be higher
D) be higher; be higher
E) not change; not change

Question

Quizplus · Accepted Answer

When a firm exits a market, the supply decreases. This decrease in supply, with demand remaining constant, typically leads to a higher equilibrium price due to scarcity. However, the equilibrium quantity will be lower because there is less of the product available for sale.

Three Firms Are Currently Producing and Selling in a Market