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The exit of existing firms from a competitive market will
A) increase market supply and increase market prices.
B) increase market supply and decrease market prices.
C) decrease market supply and increase market prices.
D) decrease market supply and decrease market prices.
Market Supply
The total quantity of a good or service that all producers are willing and able to sell at various prices in a given market.
Competitive Market
A market structure characterized by a large number of buyers and sellers, where no single participant has the power to significantly influence prices.
Market Prices
The current prices at which goods and services can be bought or sold in a marketplace, determined by supply and demand forces.
- Acknowledge how the entry and exit of new businesses influence market equilibrium and the earnings of firms in a market where prices are not set by the companies themselves.
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Learning Objectives
- Acknowledge how the entry and exit of new businesses influence market equilibrium and the earnings of firms in a market where prices are not set by the companies themselves.
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