If long-run economic losses are being experienced in a competitive market,
A)More firms will enter the market.
B)The market supply curve will shift to the right.
C)Equilibrium price will rise as firms exit.
D)Normal profit will fall to zero as firms enter.

Question

Quizplus · Accepted Answer

In a competitive market, firms will exit if they are experiencing long-run economic losses. This will decrease the supply of goods, leading to an increase in equilibrium price. More firms will not enter the market as they will not be able to earn a profit. Normal profit will not fall to zero as firms enter as firms will only enter if they can earn a profit.

If Long-Run Economic Losses Are Being Experienced in a Competitive