Question

When market conditions in a price-taker market are such that firms cannot cover their production costs, Group of answer choices the firms will suffer long-run economic losses. the firms will suffer short-run economic losses that will be exactly offset by long-run economic profits. some firms will go out of business, causing prices to rise until the remaining firms can cover their production costs. all firms will go out of business, since consumers will not pay prices that enable firms to cover their production costs.

Answer 1

some firms will go out of business, causing prices to rise until the remaining firms can cover their production costs.

Step-by-step explanation:

A price taker is a firm or a seller who is not able to set the market price for its goods and services. Instead, the price taker accepts the price set by market forces - forces of demand and supply.

An example of a price taking firm is a firm in a perfect competition

If a firm is not able to charge prices above production costs, the firm is earning an economic loss

If in the short run, firms are earning economic loss, in the long run, firms would exit the industry until economic profit falls to zero.