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The Exit of Existing Firms from a Competitive Market Will

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The exit of existing firms from a competitive market will


Definitions:

Marginal Benefit

The enhancement in satisfaction or benefit achieved by using or producing another unit of a product or service.

External Costs

Costs of an economic activity that are not borne by the participants in the activity but are imposed on others, such as pollution.

Competitive Free Market

A market structure where many firms offer products or services that are similar, allowing for free entry and exit, with prices determined by supply and demand forces.

Marginal External Cost

The cost imposed on a third party not involved in a transaction or activity due to an additional unit of production.

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