Question

When some firms exit an industry in which firms are incurring economic​ losses, the market supply curve shifts​ _______ and the market price​ _______. A. ​leftward; rises B. ​rightward; falls C. ​rightward; rises D. ​leftward; falls The economic losses of the firms remaining in the industry ▼ .

Answer 1

Answer: Option (A) is correct.

Step-by-step explanation:

Correct option: Leftward; rises

When some of the firms are exited from market because are incurring losses then as a result short run market supply decreases. This is due to the fall in the production level, since some of the firms are not producing anymore.

So, this change in the market supply will shift the market supply curve leftwards.

The market price increases as the market supply decreases.