Question

gnments > 8.2 entry and exit in the long run and efficiency in perfectly competitive markets he long run and efficiency in perfectly competitive markets entry and exit in the long run and efficiency in perfectly competitive monday by 11:59pm points 100 submitting an external tool current objective understand why firms enter or exit a competitive industry question which of the following is true about firms exiting a perfectly competitive market? select the correct answer below: the price where firms exit the market shows the price where the firm would lack enough revenue to cover its variable costs. firms are only concerned with what quantity to produce and will exit otherwise, even if they are not experiencing losses. exiting the market occurs in response to a sustained pattern of losses. exiting the market occurs in response to increased industry profits.

Explanation:

In a perfectly - competitive market, firms exit when they face a sustained pattern of losses. If the price is below the average variable cost, firms will shut down in the short - run. In the long - run, continuous losses prompt firms to exit the market. Firms are profit - maximizers and will not exit when there are profits or without considering profitability. They also consider costs and revenues when deciding to exit, not just quantity.

Answer:

C. Exiting the market occurs in response to a sustained pattern of losses.