When Firms Have an Incentive to Exit a Competitive Market

question 8

Multiple Choice

When firms have an incentive to exit a competitive market, their exit will

• A)lower the market price.
• B)necessarily raise the costs for the firms that remain in the market.
• C)raise the profits of the firms that remain in the market.
• D)shift the demand for the product to the left.

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Definitions:

Government Restrictions

Regulations and policies imposed by governmental bodies aimed at controlling or limiting certain activities or practices within a country.

Mass Production

The large-scale manufacturing of goods using assembly line techniques and machinery, aimed at producing large quantities of standardized products efficiently.

New-Category Entries

Products that are new to a company but not new to the marketplace.

Inventions

The act of creating or designing something new that has never existed before, often protected legally by patents.