If firms in a competitive market are not identical,then an increase in cost will
A) shift marginal cost to the right.
B) push the most inefficient firms out of the market.
C) push the most efficient firms out of the market.
D) Need more information.

Question

Quizplus · Accepted Answer

In a competitive market with firms that are not identical, an increase in cost will likely lead to the most inefficient firms being pushed out of the market. This is because the most inefficient firms will have higher costs and therefore will not be able to compete with the other firms in the market. The more efficient firms with lower costs will be able to continue to compete and may even be able to increase their market share as the inefficient firms exit the market.

If Firms in a Competitive Market Are Not Identical,then an Increase