If the market price is below the break-even point,in the long run we should expect

Name: If the market price is below the break-even point,in the long run we should expect
Brand: Quizplus
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Question

Quizplus · Accepted Answer

When the market price is below the break-even point, firms are not covering their costs, leading to losses. In the long run, this situation is unsustainable, causing firms to exit the industry. As firms leave, the market supply decreases, which, according to the law of supply and demand, leads to an increase in the product price.

If the Market Price Is Below the Break-Even Point,in the Long