When firms in a market with free entry and exit experience economic losses, then:
A)some sellers will exit the market, reducing average seller losses.
B)new sellers will enter the market, reducing average seller losses.
C)some sellers will exit the market, raising average seller losses.
D)new sellers will enter the market, raising average seller losses.

Question

Quizplus · Accepted Answer

When firms experience economic losses in a market with free entry and exit, some sellers will exit the market. This reduces the supply in the market, which can lead to higher prices for the remaining firms, potentially reducing or eliminating their losses.

When Firms in a Market with Free Entry and Exit