Firms exit a competitive market when they incur an economic loss.In the long run,this exit means that the economic losses of the surviving firms

Question

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When firms exit the market, the supply decreases, which causes the price to increase. As a result, the remaining firms can earn economic profits, which attract new firms to enter the market. This process continues until the economic profits are competed away, and each firm earns a normal profit, i.e., zero economic profit. Therefore, the economic losses of the surviving firms decrease until they equal zero in the long run.

Firms Exit a Competitive Market When They Incur an Economic