If firms in an industry are incurring an economic loss, then as some exit, the p

Question

If firms in an industry are incurring an economic loss, then as some exit, the price ____ and the surviving firms’ economic losses ____.
A. rises; do not change
B. rises; become smaller
C. falls; become larger
D. falls; become smaller
If firms in an industry are incurring an economic loss, then as some exit, the price ____ and the surviving firms’ economic losses ____.
A. rises; do not change
B. rises; become smaller
C. falls; become larger
D. falls; become smaller
If firms in an industry are incurring an economic loss, then as some exit, the price ____ and the surviving firms’ economic losses ____.
A. rises; do not change
B. rises; become smaller
C. falls; become larger
D. falls; become smaller

Explanation / Answer

Answer
B. rises; become smaller
The firm's exit so the supply curve shifts to the left and the price level increases and in long run becomes equal to average total cost so the losses start eliminating which makes smaller loss

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