If losses are being made in a perfectly competitive industry,in the long run industry supply will ______ and market price will _______.

Question

Quizplus · Accepted Answer

In a perfectly competitive industry, firms are price takers, meaning they have no control over the market price. If losses are being made in the industry, some firms will exit the market, causing the industry supply to decrease. This will eventually lead to an increase in the market price in the long run, as the remaining firms will be able to earn a profit. Therefore, the correct choice is C where industry supply will fall and market price will rise.

If Losses Are Being Made in a Perfectly Competitive Industry,in