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Suppose that initially the price is $20 in a perfect competitive market. Firms are making zero economic profits. then the market demand shrink permanently, some firms leave the industry, and the industry
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36 votes
36 votes
Suppose that initially the price is $20 in a perfect competitive market. Firms are making zero economic profits. then the market demand shrink permanently, some firms leave the industry, and the industry turn to a long-term equilibrium. what will be the new equlibrium price, assuming cost conditions in the industry remain constant?

-$20

-$16

-lower than $20 but exactly price not known without more information

-larger than $20 but exactly price not known without more information

User Cole Stanfield
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1 Answer

10 votes
10 votes
larger than 20 but exactly price not know without more information
User Matthewb
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